Moving up the housing ladder without taking a risk

The current housing market makes moving up the ladder a risky proposition. Many homeowners interested in making a move are unsure whether the sale proceeds of their existing property will cover the price of the new one.

The current housing market makes moving up the ladder a risky proposition. Many homeowners interested in making a move are unsure whether the sale proceeds of their existing property will cover the price of the new one.

This makes them anxious to sell their current home before they buy a new property. In fact, waiting for the sale of the old property isn’t always necessary. Creative legal solutions exist allowing homeowners to buy a new home before they sell the old one without taking any risk.

The parties can agree that the buyer has the right to withdraw from the purchase of the new property, unilaterally and without any penalty, if he is unable to sell his existing property within a specified period, for example six months. The seller can always negotiate that he is free to keep trying to sell his property for a higher price during the agreed time period and that he will give the buyer the opportunity to purchase at the end of that period. This gives the seller the security of knowing the minimum price that he will probably be able to get for his property. The buyer knows that he won’t run any risk if he can’t sell his existing property.

Another option is to agree that the seller will make the buyer’s mortgage payments, less any tax rebate, for up to a maximum period, for example a year or two years. The funds to cover the payments are held as security, for example by the notary dealing with the transaction. When making this arrangement the parties can agree the minimum price at which the buyer is obliged to sell his current home. They can also agree how the remaining funds will be shared if the property is sold earlier than the end of the agreed maximum period.