One of the big issues for vendors is whether they should sell first or buy first. Selling your home first is the financially safe option. That way you know how much you have to spend.
Mortgage Studio adviser Wayne Lawrie sees this dilemma regularly: homeowners grappling with the issue of whether to buy or sell first. Just last month Lawrie saw a client who had only just fixed his mortgage rate. He had no intention of selling but then spotted the house of his dreams and rushed to put his existing home on the market.
The market is different to 18 months ago when it was relatively easy to sell and buyers who had seen the house of their dreams, or at least an ideal property for their next step up or down the property ladder, didn't want to lose it.
In the current market there is no guarantee that your home will sell immediately. What's more, says Lawrie, it's extremely difficult to get bridging finance from banks should you go unconditional on a purchase but not be able to sell your home. This could be costly.
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"Bank finance is not what it was when it comes to bridging. It is really hard to get," Lawrie says. Banks aren't keen to lend large amounts of bridging finance if it "doesn't service". That means that the borrower doesn't have the income to pay such a huge loan. "The bank would only do it if there was plenty of security in the property."
There are homeowners who simply won't consider buying until they've sold their own home. "Some people do this to make sure they have the money in the bank and know how much they have got to spend. It provides a certain level of comfort.
"But there is a possibility if they don't find another place they are going to need to temporary accommodation, meaning moving twice."
In the current market vendors may be willing to accept conditional sales allowing the buyer to sell their existing home, says Lawrie. It comes down to negotiation as to how long the vendor will allow the purchaser to sell their place.
"They are contracting to buy your home subject to obtaining an unconditional sale over their home within a certain timeframe. Perhaps four to six weeks or so. Vendors are normally advised to include an escape clause," he says.
"If they were to receive an unconditional offer during that period, they can give you notice. You either have to say ‘yes I am going to go unconditional' or walk away from it. Someone could come along at any time so these arrangements can put the buyer in an insecure position."
For most people, that means losing the property if you don't have a sale, otherwise you could be taking a big punt, says Lawrie. This can be costly if you have been spending money on your home to sell it in the meantime.
