Is selling in a hot market your best option?

By Your Mortgage
You’re ready to sell. The housing market is white hot and while auction clearance rates are worsening slightly prices are still steep. If you’ve owned your home for more than a few years profit seems guaranteed. But is selling in a rising market really your best option?
If you’re looking to sell, now’s the time to consider your option. And in a seller’s market, you’ve got plenty of them.
First off, take hard look at why you’re selling. If you’ve decided to move to something bigger and better you need to remember that a hot market isn’t necessarily the type of market you want to buy in.
If you’ve got some substantial finances behind you, however, your options improve significantly. Timing the selling and buying of your property will be less stressful, and you’ll also have the option of taking advantage of a solid rental market.
So what, exactly, are your options?
If you want to buy a new home with a little extra room for junior but can’t afford a bigger mortgage, consider renovating. Not only will some smart renovations add extra value to your property, but you’ll be able to tailor your existing home to your exact needs. Plus, your exiting home can feel just like a new one with little more than a lick of paint and a few clever alterations.
Start thinking outside the square. Raising your home or building underneath it can be a great way to add space to your existing block. You’ll need to check with your local council as to the percentage of your block that you’re allowed to build on, but if you get the go-ahead, think about all that extra space!
Turning your garage into a guest bedroom or office is also another creative way to instantly add space and remove noisy teenagers or nagging grandparents. Or if you’re the family type and want to keep all your offspring under the same roof, moving your office into an annex under the stairs can free up a bedroom and help create the impression that you’re super hardworking at the same time. Bonus!
Buy, then sell
This is only going to work if you’ve got some cash reserves. The upside? If you buy before selling, you won’t be stressing about where you’re going to live and worrying whether the family car is big enough to live out of. The downside? You’ll have a scramble to sell your old house and could be left paying two mortgages if your old house doesn’t get snapped up.
If you need to buy a new home before selling your existing one you might need to consider applying for a bridging loan. This will simplifying the transition between properties significantly. Basically, a bridging loan works by assessing the level of equity available in your existing home. Your bank may then decide to pay forward the entire purchase amount plus fees on your new home, providing you with up to six months to sell your old home. All without a night spent living out of your boot.
Sell, then buy
If you decide to sell your exiting property before buying, you’ll be under pressure to find another house quickly and may end up overpaying on a new property.
In a hot market, selling your house will probably be much easier than buying a new one. To avoid the whole family-in-car scenario, you may want to start looking at prices of the houses you want to live in. That way you’ve got time to save up a deposit, or organise a bridging loan, to tide you over during the time where you potentially own two houses at once.
Become a landlord
It’s no secret – the Australian property market is bursting with investors right now and with good reason; the rental market is strong and prices are rising.
If you can financially manage to pay two mortgages at the same time then becoming a landlord could help you on the path to financial freedom. Not only do you get to hold onto your property, increasing in price each year as it appreciates, but there are some significant tax breaks and rising rents that go a long way to helping you cover the cost of that second mortgage.
However, becoming a landlord comes with its fair share of challenges. Tenants can damage your property and you may be left tenantless – unlikely in a hot rental market but something to be aware of nonetheless.
If making the ‘right’ decision seems a little overwhelming, consider a visit to a professional financial advisor who can help you make the best property decision for your circumstances.