Simultaneous Settlement: Selling And Buying A Home At The Same Time

Are you trying to sell your current home and buy a new one at the same time? If so, you’re probably worried about juggling two mortgages, renting in between, or missing out on your dream home. It’s a common challenge, but there’s a solution: simultaneous settlement.

Selling and buying a home simultaneously might seem overwhelming, but with the right strategy, it’s entirely achievable. From aligning settlement dates to managing finances and tackling potential challenges, this guide covers everything you need to know to make the process smooth and stress-free.

What Is Simultaneous Settlement?

Simultaneous settlement is when the sale of your current home and the purchase of your new home occur on the same day. This allows you to move directly into your new home without the added stress of paying two mortgages or finding temporary accommodation.

While it sounds ideal, simultaneous settlement can be tricky to co-ordinate. The transactions are closely dependent on each other, so if one settlement is delayed – even by a day or two – it can disrupt the entire process.
Despite the risks, simultaneous settlement can be managed successfully with proper planning and expert advice. Let’s look at how to make this process work for you.

How Does Simultaneous Settlement Work?

The first step in simultaneous settlement is to align the settlement dates for both your sale and purchase transactions. This involves negotiating a flexible settlement period, which can extend up to six months, providing ample time for co-ordination. You should also include a clause to bring the settlement date forward with at least four weeks’ notice.

• If selling your property first: Negotiate a long settlement period with the buyer to give yourself time to find and purchase a new property and align both settlement dates.
• If buying your property first: Secure a long settlement period from the seller for your new home, allowing time to sell your current property and align settlements.

The next step is the exchange of contracts. At this stage, contracts for the sale of your current home and the purchase of your new one are finalised and exchanged.

Managing finances is critical throughout the process. Your lender or mortgage broker ensures that the funds from the sale of your old home are used toward the purchase of your new property. If the proceeds from the sale of your old home are not sufficient to cover the purchase price, your lender may arrange a bridging loan to cover the temporary shortfall.

Finally, on settlement day, all transactions come together. The funds from the sale of your old home are transferred to your account or lender, and these are immediately used to complete the purchase of your new home. At the same time, the legal ownership of both properties is transferred to the respective buyers. Once everything is finalised, you can collect the keys to your new home and move in, completing the simultaneous settlement process in one smooth transition.

Benefits Of Simultaneous Settlement

• You can move straight from your old home to your new one on the same day – no need for renting or storage.
• Use the proceeds from the sale of your current home to finance the purchase of your new one, eliminating the need for costly bridging loans with high interest rates and short repayment terms.
• Moving just once saves money on removalists, storage, and utility reconnections.
• Avoid the pressure of juggling two properties or rushing to sell under bad conditions.
• Settling both homes together makes paperwork and legal steps much easier to manage.

Challenges Of Simultaneous Settlement

• Complex Co-ordination: Managing multiple parties and transactions requires perfect alignment. Any misstep can cause delays or complications.
• Dependence on Timely Execution: The transactions are interdependent, meaning a delay in one can lead to penalty fees, deposit loss, or even settlement failure.
• Financial Risks: Homeowners may feel pressured to sell below market value or buy at a higher price to align settlement dates, leading to potential financial loss.
• Negotiation Difficulties: Convincing buyers or sellers to agree to flexible terms, like conditional agreements or adjusted timelines, can be challenging and requires strong negotiation skills.
• Increased Stress: Tight deadlines and high stakes create stress, as managing two transactions simultaneously can be overwhelming.
• Legal Complications: Simultaneous settlements involve intricate legal requirements. Professional expertise from conveyancers or solicitors is important to avoid legal issues that could derail the process.

If simultaneous settlement doesn’t suit your needs, options like bridging loans or renting temporarily may provide alternatives. Speak to your mortgage broker or financial adviser to explore the best option for your situation.

Tips For A Successful Simultaneous Settlement

• Excellent Negotiation Skills
  • Be prepared to sell slightly below market value or buy slightly above value to incentivise the other party to agree to a flexible settlement.
• Support from Trusted Professionals
  • Get an experienced real-estate agent to negotiate favourable terms.
  • A conveyancer/solicitor can handle legal agreements and settlement clauses.
  • A mortgage broker will co-ordinate financing and ensure funds are ready on time.
• The Right Circumstances
  • Simultaneous settlement often works best when the sale occurs between friends or family members who are willing to co-operate.

Let the Experts Handle Your Simultaneous Settlement

We’re here to make co-ordinating your purchase and sale simple. Our experienced mortgage brokers will:

• Find the most suitable loan options for your situation.
• Guide you step-by-step to ensure everything aligns perfectly.

Call us today at 1300 889 743>1300 889 743 or fill out our free online assessment form, and we’ll get in touch to help you achieve a smooth, stress-free settlement.