Aucklanders buying unconditionally before their house has sold can end up losing heavily if it all goes wrong.

House hunters desperate to secure their dream home are risking financial disaster by signing unconditional purchase agreements before their current property has sold.

Property experts warn that most buyers can't afford to service two mortgages if their existing house fails to secure a buyer. Buyers could lose their deposit and face legal action if they fail to maintain the repayments.

Loan Market mortgage adviser Bruce Patten said he had noticed an increase in Auckland buyers prepared to take the risk in recent months.

This was driven by a shortage of available properties as year-on-year listings fell and a belief that most houses would be snapped up in the current market.


"Everybody thinks their property is going to be sold really quickly because they see what's happening around them."

But few homeowners could service two mortgages and most did not qualify for bridging finance from banks, Mr Patten said.

He warned that homeowners who could not finalise a sale before their new property's settlement date could lose their deposit and be sued for any loss of value.

Barfoot & Thompson Mt Albert branch manager Jean Smith had noticed a similar trend. Some buyers were prepared to be left owning two houses for a time rather than risk missing out on their dream property.

"I think in the old days you would buy one property subject to selling your [current] property. There's been a few more in the last few months that buy first then put their house on the market. They're not prepared to lose their [new] house."

Purchasers might ask for a longer settlement period in such cases to give them a buffer period.

A three-bedroom property in Unsworth Heights is currently being advertised on with the tag: "Vendor Already Bought, Definitely For Sale!!!"

An ad for a "blank canvas" 1.4ha section in Pirongia, Waikato makes a similar appeal, as does one for a four-bedroom home in Leigh: "This must be sold."

An Auckland couple have made a calculated risk by purchasing a four-bedroom home in Beachlands two weeks ago for $850,000 while still owning a Bucklands Beach property which has just gone on the market.

The new property has a settlement date of November 17, giving the couple 10 weeks to sell their existing home or risk being left seriously out of pocket.

"I guess worst-case scenario we would lose our deposit and potentially be sued for any loss of sale value," the husband, 35, said. "But personally I don't believe that's going to happen."

The man was confident of securing a quick sale and saw the new property as a great investment opportunity. But he admits the decision has created tension.

"You should try living with my wife right now. She's gone through every worst-case scenario in the book."

New Zealand Bankers Association chief executive Kirk Hope said banks would consider a borrower's servicing ability before agreeing to lend on a second home or offering bridging finance.

They might also consider the rent an existing property could deliver if it did not sell.

"We want to help people into properties if we can, but also we don't want them to end up in a really bad situation if ... they're sitting on two properties," he said.