Unlike the experience of buying a first home, when you’re looking to move-up, and already own a home, there are certain factors that can complicate the situation. It’s very important for you to consider these issues before you list your home for sale. Not only is there the issue of financing to consider, but you also have to sell your present home at exactly the right time in order to avoid either the financial burden of owning two homes or, just as bad, the dilemma of having no place to live during the gap between closings.
In this Summer Quarterly InHouse, I outline the six most common mistakes homeowners make when moving to a larger home. Knowledge of these six mistakes, and the strategies to overcome them, will help you make informed choices before you put your existing home on the market.
*Feel free to share these SIX mistakes with anyone you know considering moving up to a bigger home this summer.
1. Rose-colored glasses
Most of us dream of improving our lifestyle and moving to a larger home. The problem is that there’s some- times a discrepancy between our hearts and our bank accounts. You drive by a home that you fall in love with only to find that it’s already sold or that it’s more than what you are willing to pay. Most homeowners get caught in this hit or miss.
strategy of house hunting when there’s a much easier way of going about the process. For example, find out if your agent offers a Buyer Profile System or “House hunting Service,” which takes the guesswork away and helps to put you in the home of your dreams. This type of program will cross- match your criteria with ALL available homes on the market and supply you with printed information on an on-going basis. A program like this helps homeowners take off their rose-colored glasses and, affordably, move into the home of their dreams.
2. Failing to make necessary improvements
Goal setting is one of the largest parts of being results driven, but your goals need to
be SMART. SMART goals are Specific, Measurable, Achievable, Relevant, and Time Based.
Every part of SMART needs to be thoroughly thought out when creating a goal. If you are working every day without a goal in mind, you may find yourself complacent and apathetic when going to work. Work like this lacks the purpose and drive that a SMART goal can provide, so
make sure your goals are SMART.
3. Not selling first
You should plan to sell before you buy. This way you will not find yourself at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below-market value because you have to meet a purchase deadline. If you’ve already 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 made significant headway on finding your next home, you might want to put in a contingency 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, an- other option could be renting your home and putting it up on the market later – particularly if you are selling a smaller, starter home. You’ll have to investigate the tax rules if you choose this latter option. Better still, find a way to eliminate this situation altogether by getting your agent to guarantee the sale of your present home (see point number 5 below).
4. Failing to get a preapproved mortgage
Preapproval is a very simple process that many home- owners fail to take advantage of. While it doesn’t cost or obligate you to anything, preapproval gives you a significant advantage when you put an offer on the home you want to purchase because you know exactly how much house you can afford, and you already have the green light from your lending institution. With a preapproved mortgage, your offer will be viewed far more favorably by a seller – sometimes even if it’s a little lower than another offer that’s contingent on financing. Don’t fail to take this important step.
5. Getting caught in the “Real Estate Catch 22”
Your biggest dilemma when buying and selling is deciding which to do first. Point number 3 above advises you to sell first. However there are ways to eliminate this dilemma altogether. Some agents offer a Guaranteed Sale “Trade-Up” Program that actually takes the problem away from you entirely by guaranteeing the sale of your present home before you take possession of your next one. If you find a home you wish to purchase and have not sold your current home yet, they will buy your home from you themselves so you can make your move free of stress and worry.
6. Failing to coordinate closings
With two major transactions to coordinate together with all the people involved such as mortgage experts, appraisers, lawyers, loan officers, title company representatives, home inspectors or pest inspectors the chances of mix-ups and miscommunication go up dramatically. To avoid a logistical nightmare ensure you work closely with your agent.