Homeless for three weeks after selling his Auckland home earlier this year, a mortgage broker says a two-and-a-half month settlement wasn’t long enough to find something to buy.
It comes as a shortage of property listings continues to push up house prices. The Real Estate Institute of New Zealand (REINZ) May property report shows the median selling price across New Zealand is up 32.3 percent year-on-year, acting CEO Wendy Alexander saying "a lack of total housing supply is continuing to push up house prices".
Homeowners wanting to sell their home can choose to sell first, then buy. Alternatively, they can buy first, then sell their existing home. But in the current market, there are risks around both. Those who sell first may not find another home before the new owner takes possession of their current one. Those who buy first may have to rely on an appraisal of what their home is worth - and could be stuck owning two homes until their existing one sells and the new owner takes over.
Having sold his home on Auckland’s North Shore in February only to find nothing to buy, mortgage broker Campbell Hastie says in his experience it’s easy to sell - but much harder to buy.
A door-knock by a neighbour culminated in the sale of his two-bedroom cottage on 1200m2 of land for "good money". As he and his wife didn’t have another house lined up, their agreement had a settlement date of two-and-a-half months' time.
Initially thinking that was enough time to buy another home - or at least a rental - they quickly found it wasn’t. An offer they made after three others were rejected fell $40,000 short. As homeowners for the last 15 years, even as a professional couple, finding a rental in a short space of time was "hard".
"The whole process began to feel a lot like a lottery. Can’t get a house. Can’t get a rental. With a month to go we were starting to feel the pressure because we had literally signed up to be homeless on May 13," Hastie said.
Having learned their "best offer had to be made and quickly", they eventually bought a new build home in Red Beach. But in hindsight, a settlement date of two-and-a-half months’ time wasn’t quite long enough: for around three weeks, they were stuck with nowhere to live.
"Because the Code Compliance Certificate for the new place hadn’t arrived before May 13, we ended up staying with family...we [were] homeless for about three weeks," Hastie explained.
He suggests homeowners considering selling understand their options early on - and have a plan b if things don’t pan out as expected. That might mean negotiating a slightly longer settlement date to allow enough time to find a new home and move.
"Selling a house has never been so easy: just keep moving and [stay] informed," Hastie said.
Noting the slowdown in property listings, particularly during winter, Peter Thompson, managing director of real estate agency Barfoot and Thompson said selling before buying allows flexibility and puts homeowners in a better position to negotiate on another property.
"You don’t want to be owning two properties at the same time...the safest way to do that is selling yours and then knowing how much you’ve got - but it means you may be homeless," Thompson said.
For sellers wanting to find another property to buy, he said a settlement date of two-to-three months’ time is realistic. Those who don’t find something in time have the option to rent.
"Somewhere between that two and three [months] is ideally what you’d have as a safeguard on today’s market," Thompson added.
Real estate is typically seasonal, he said. Late January to early February is a popular time for homeowners to list properties, which are then sold over March and April. He said it’s still too soon to tell whether the Government housing announcement is having a widespread effect on demand - and prices.
Sellers who don't want to be caught out without somewhere to live could consider allowing enough time in their settlement date to find something else. Depending on how the property will be sold (e.g. auction or by negotiation) and the level of buyer interest, those wanting to buy first could make their offer subject to the sale of their existing home.