What does buying and selling at the same time actually mean?

Buying and selling at the same time means signing two separate contracts, a sale and a purchase, and choosing which settles first or whether both settle on the same day. You have three real options, and each one trades one risk for another.

Can I make my purchase subject to the sale of my house?

Not unless the seller agrees. There is no finance condition and no subject to sale condition printed in the standard NSW contract. If you want one, it has to be written in as a special condition, and the seller can say no. Many sellers will not agree, because it leaves their home tied up while they wait for your sale, and we generally steer clients away from relying on it. A better plan is usually a longer settlement on your purchase and a Plan B if the sale runs late. Our guide to the cooling-off period and the finance clause explains what those clauses do and do not protect.

How do you line up the two settlement dates?

You line them up by agreeing both dates before you exchange on either contract, with the purchase settling on or after the sale.

Can I use the deposit from my sale to pay the deposit on my purchase?

Usually not. When your buyer exchanges, they pay a deposit, normally 10 per cent of the price. It is held by the agent or a conveyancer as stakeholder and paid out at settlement. It is not yours to spend before then. A buyer can agree to release part of it early through a special condition, but plenty of buyers’ conveyancers say no, and they are right to. Read our guide to a release of deposit before you agree to one or ask for one. The deposit on your purchase normally comes from savings, a loan drawn early, or a deposit bond if the seller accepts one.

How does the cooling-off period affect buying and selling at once?

This is the trap most people miss. The cooling-off period belongs to the buyer. When you sell, your buyer usually has 5 business days after exchange to walk away, and until that time runs out or is waived, your sale is not certain. If you have already exchanged on your purchase, you can be bound to buy while your sale falls over. Some practical points:

• Try to exchange on your sale first, or make sure your buyer’s cooling-off period has ended before your own cooling-off on the purchase runs out.
• If your buyer waives the cooling-off period with a 66W certificate, your sale firms up straight away.
• Your own cooling-off period on the purchase is a safety net, but walking away costs 0.25 per cent of the price.
• There is no cooling-off period at auction, so bidding on your next home before your sale is locked in is a real risk.

What happens on settlement day when you do both?

Settlement in NSW is electronic, and for most people it runs through PEXA. Your sale and your purchase sit in separate workspaces, which can be linked so they settle together. On the day, your buyer’s funds come in, your old mortgage is paid out, adjustments for rates and water are made, and the balance moves across to the purchase workspace alongside your new loan and any savings you are adding. Read more about the discharge of mortgage and how rates and water are adjusted. Two things to plan for:

• Time. Settlements are booked for a time but run late if any party is not ready. With two settlements that is two sets of banks and two other sides, so do not book the removalist for first thing in the morning.
• Possession. Staying on after your sale settles, or moving into your new home before it settles, needs a written agreement. Informal arrangements create insurance and liability problems. Keep your insurance on the old home until your sale has actually settled.

What if one settlement runs late?

In a simultaneous settlement a delay on one contract lands on the other, because the purchase money is coming out of the sale. Missing the date is a breach of contract, and the other side can serve a notice to complete. Depending on your contract, you may also face penalty interest, and in the worst case the deposit is at risk. Being short of money because your own sale was delayed is not an excuse the contract recognises unless it says so. If a gap opens, the usual fix is a short extension agreed in writing on the affected contract. Our guide to what happens if settlement is delayed explains the options.

Do I need bridging finance?

You may avoid it if your settlements are properly lined up and your net sale proceeds, your loan and your savings cover the purchase. You only need bridging finance when the purchase settles before the sale. Whether you can get it, what it costs and how long it can run are questions for your broker or lender, not your conveyancer. The government’s MoneySmart site has a plain definition of bridging finance.

Which costs hit at the same time?

Both sides of the move have costs landing around the same day, and sale proceeds are not all yours. Plan for:

• Your old mortgage payout and any break costs
• The agent’s commission and marketing
• Stamp duty on the new home. See when you pay stamp duty, and the current rates on the Revenue NSW transfer duty page
• Conveyancing and PEXA fees on both matters
• An ATO clearance certificate, which you should apply for the day you decide to sell. If you are an Australian tax resident and do not have one, the buyer must withhold up to 15 per cent of the price at settlement, which is money you were counting on for the purchase. Read why you need an ATO clearance certificate

What should you do before you list or make an offer?

Brief your broker and conveyancer on both properties first, then plan the dates and a backup.

What is the short answer on buying and selling at the same time in NSW?

You can buy and sell at the same time, but you are signing two separate contracts that the law does not link. Plan the order, line up the settlement dates, build in a buffer, check the cooling-off periods, and do not count on your sale deposit or on a subject to sale clause. Get that planning done before you exchange on either contract, not after.