Buying and Selling a Property at the Same Time in NSW: What Could Possibly Go Wrong?

You’ve sold your house. You’ve found the next one.

The plan sounds beautifully simple: your sale and purchase settle simultaneously, the money flows from one transaction into the other, you hand over one set of keys and collect another.

Perfect.

And quite often, that’s exactly what happens.

But buying and selling property at the same time in NSW involves A LOT of moving parts… and the slightly terrifying reality is that some of those moving parts belong to other people:

• your purchaser;
• your vendor;
• the conveyancers;
• the banks; and
• if there are other properties in the chain, potentially a collection of strangers whose ability to settle may suddenly become extremely important to your day.

When everyone is ready, it all comes together beautifully.

When someone isn’t? Welcome to the property settlement domino effect.

Can You Buy and Sell a Property at the Same Time?

Absolutely. People do it every day.

If you need the money from your sale to complete your purchase, the transactions can usually be coordinated so your sale settles first and the required funds flow through to your purchase.

When it works, it can be remarkably seamless.

Your old property settles. Your new property settles. You collect the keys. The removalist arrives. Everyone is happy.

You briefly wonder what you were so stressed about.

We recommend enjoying that feeling.

The Problem: Your Sale and Purchase Are Two Separate Contracts

This is the part that can catch people out.

You might think of the transactions as: “We’re selling this house so we can buy that house.”

Legally, however, you have two separate contracts.

Under one contract, you have promised to sell your property to your purchaser. Under another, you have promised to buy a property from your vendor.

The vendor of the property you are buying generally doesn’t care that your purchaser’s bank is having “a system issue”. You still have a contractual obligation to settle your purchase.

Likewise, your purchaser generally doesn’t care that the vendor of your new property needs another day to move out. You still have an obligation to complete your sale.

This is why buying and selling simultaneously needs to be carefully coordinated.

The Biggest Risk: One Part of the Chain Isn’t Ready

When your sale proceeds are being used to fund your purchase, the two settlements can be linked in PEXA and scheduled to settle simultaneously.

The money doesn’t need to land in your bank account in between. The required funds flow from your sale settlement directly into your purchase settlement as part of the linked transactions.

Very clever!

But it does mean that both sides need to be ready at the same time.

Your sale might be completely ready to go. Your bank might be ready for your purchase. Your vendor might be ready. We might have everything perfectly lined up.

But if your purchaser’s lender isn’t ready? We have a problem.

Because the funds from your sale are needed for your purchase, one transaction can hold up the other.

Think of a linked settlement as a property version of a Rubik’s Cube:

• Your sale needs to be ready.
• Your purchase needs to be ready.
• Your purchaser needs to be ready.
• Your vendor needs to be ready.
• The banks need to be ready.
• The figures need to balance.
• The PEXA workspaces need to be correctly linked so the money flows where it’s supposed to go.

When everything lines up, both properties settle, and it’s beautifully uneventful. That’s our favourite kind.

When one piece doesn’t line up, however, the whole thing can stop.

“But It’s Not My Fault!”

We know. And sometimes it genuinely isn’t.

Your purchaser’s bank being unprepared isn’t something you can control. Neither is an issue arising elsewhere in the settlement chain.

Unfortunately, that doesn’t necessarily change your obligations under the contract for the property you’re buying.

If the linked settlements can’t proceed and you aren’t able to complete your purchase as required, there may be consequences under your purchase contract, depending on its terms and the circumstances.

That’s the slightly uncomfortable reality of buying and selling at the same time: your ability to complete one contract can depend on people who aren’t even parties to the other one.

This is why we carefully coordinate linked settlements and keep an eye on both transactions as settlement approaches.

It’s also why, when everything settles exactly as planned, we experience a level of satisfaction that is probably difficult to explain to anyone who doesn’t work in conveyancing!

Rubik’s Cube solved. Keys released. Everyone can go home.

What About Bridging Finance?

Bridging finance can give you more flexibility by allowing you to complete your purchase without relying on your sale settling at exactly the same time.

That can remove some of the pressure of a linked settlement, but it can also mean additional interest and finance costs and won’t be suitable for everyone.

It’s a conversation to have with your lender or mortgage broker before committing to your purchase.

Sell First, Buy First or Settle Both Together?

There isn’t one perfect answer.

• Sell first, and you have certainty about your available funds, but you may need somewhere to live between properties and could end up moving twice.
• Buy first, and you know where you’re going… but unless you can comfortably fund both properties, you may need bridging finance or another lending arrangement.
• Settle both together, and you can move directly from one property to the next, but the transactions become dependent on each other.

It’s beautifully efficient when everything lines up.

Which is why we spend quite a lot of time making sure everything lines up.

What About the Keys and the Removalists?

This is where the legal transaction meets real life.

You have to move out of one property and into another, often with children, pets, furniture and everything else you own coming along for the ride.

If your sale and purchase are settling simultaneously, you won’t be able to collect the keys to your new property until settlement has completed.

For that reason, if you can avoid booking removalists for settlement day, we recommend that you do. If you absolutely have to move that day, build as much flexibility into your arrangements as possible.

And definitely don’t arrange tradespeople to start work at the new property on settlement day.

Settle first. Collect the keys. Then unleash the removalists, painters, electricians and renovations.

There will be plenty of time for chaos once you actually own the property.

Can You Move In Before Settlement?

Not automatically.

You don’t own the new property until settlement has occurred.

Sometimes early access can be negotiated with the vendor and properly documented, but it isn’t something you should assume will be available simply because you’re buying the property anyway.

From a legal perspective, those few days matter.

From the vendor’s perspective, so does your couch.

How Do You Reduce the Risk?

You can’t eliminate every risk involved in buying and selling, but good planning makes an enormous difference.

• Make sure your conveyancer, broker and lender understand how the transactions fit together.
• Don’t commit to settlement dates without checking that they work across both contracts.
• Understand exactly how your purchase is being funded and whether you have any backup if the plan changes.
• Be realistic about moving arrangements.

The goal isn’t to plan for everything to go wrong.

It’s to avoid having only one possible way for everything to go right.

Is Buying and Selling at the Same Time a Bad Idea?

Not necessarily, but it is something you should go into with your eyes open.

Buying and selling at the same time is incredibly common, and we regularly manage linked sale and purchase transactions. But there are additional risks when the transactions depend on each other, and it’s important to understand those risks before committing to both contracts.

Good planning can reduce the risk, but it can’t remove it entirely. Sometimes a delay is caused by someone further along the chain (a purchaser, a vendor or a lender) and is completely outside your control.

Our job is to coordinate the transactions, keep a close eye on everything as settlement approaches and identify potential problems as early as possible.

So yes, buying and selling at the same time can work beautifully.

Just go into it knowing that there are more moving parts… and occasionally one of them refuses to move.

Planning to Buy and Sell at the Same Time?

At MG Conveyancing, we regularly coordinate linked sale and purchase transactions across Sydney and the Central Coast, from the Inner West and Northern Beaches to Gosford.

If you are planning to buy and sell property at the same time, talk to us before you commit to settlement dates. We’ll help you understand how the transactions fit together, identify the risks and make the process as uneventful as possible.

Because when it comes to settlement day, boring is exactly what we are aiming for.