Thinking of Trading Up? Avoid these 6 Mistakes
Moving up to a larger home can be an exciting time for you and your family, but unlike buying your first home, there are many other factors to consider before making a decision.
Not only is there the issue of financing to consider, but you may also have to sell or rent your current home at exactly the right time in order to avoid the potential outcome of having to pay for two homes or being homeless.
These are six most common mistakes homeowners make when moving to a larger home. Prior knowledge of these six mistakes, and the strategies to overcome them, will help you make informed choices before selling your existing home.
Dreams vs. Reality
Most of us dream of improving our lifestyle by moving to a larger home at some point. Sometimes our hearts and our bank accounts don’t necessarily work hand in hand. You may drive by a home that you fall in love with only to find that it’s already sold or that the price is more than what you are willing to pay or can afford. Many homeowners get caught in this “swing and a miss” strategy of house-hunting. There’s a much easier and less stressful way of going about the process. By seeking out an agent who has a Buyer “Property Priority Notification System,” which removes the guesswork and helps to put you in the home of your dreams without missing out on your dream home. This completely free program will match your criteria with all homes on and off the market and then supply you with all the information on an on-going basis. This kind of program helps homeowners take off their rose-coloured glasses and move into their dream home.
Not Improving Your Current Home
In order to get the top dollar for your home, there are always certain things you can do to enhance it in a prospective buyer’s eyes. Many of these fix-ups or upgrades don’t have to cost an arm and a leg. Minor investment can come back to you several-fold in the price you are able to get when you sell. It’s very important that these improvements be made before you put your home on the market. A home equity line of credit a great alternative to help pay for these additional costs if capital isn’t readily available.
Should I Buy or Sell First?
This decision will be based on current market conditions and the advice of a trusted professional. Generally in a buyer’s market you should sell before you buy. This way you will not place yourself at a disadvantage by feeling pressured to accept an offer that is below-market value because you have to meet a purchase deadline on the other property. Conversely, once you’ve sold your home, you can buy your next one with no strings attached. If you do get a tempting offer on your home but haven’t found your next home, you might want to put in a first refusal clause in the sale contract which gives you a reasonable time to find a home to buy. If the market is slow and you find your home is not selling as quickly as you anticipated, another option could be to rent your home and put it on the market later - particularly if you are selling a smaller, starter home at market-attractive price.
In a seller’s market it is generally advised to find a home before selling your property. With low inventory and pent up demand, it may take several weeks or months to secure the right property. You wouldn’t want to be stuck with a sold home and no where to go.
Failing to get a Pre-Approved Mortgage
Pre-approval is a very simple process that many homeowners fail to complete prior to entering the real estate market. At no cost, a pre-approval gives you a significant advantage when you put an offer on the home you want to purchase because you know precisely how much house you can afford, and you already have the “green light” from your lending institution which gives you peace of mind when submitting the offer. With a pre-approved mortgage, your offer will be viewed far more favourably by a seller.
Avoid having to move twice, a trusted professional can guide you and help you line up the moving dates so you’re not stuck moving into a storage locker for a period of time. Ensuring bridge financing is available, coordinating movers and switching utilities can be a daunting task, avoid having to do it twice. Generally it is recommended to take possession of the new property prior to closing on your current home.
Failing to Coordinate Closings
Coordinating two major transactions involves a lot of different moving parts with many different people such as realtors, mortgage brokers, appraisers, lawyers, title company representatives, insurance agents, home inspectors or septic inspectors - the chances of mix-ups, miscommunication and or issues go up dramatically. To avoid a logistical nightmare, ensure you work closely with a seasoned agent.