AVOID THESE TRADE-UP MISTAKES
When you’re looking to move-up, and already own a home, certain factors can easily complicate the situation. It’s very important for you to consider these issues before you list your home for sale. Inadequate consideration of them could lead to unnecessary problems, such as paying for two homes or having no place to live.
Following are the most common mistakes many homeowners tend to make when moving to a larger home. Being aware of these potential problem areas, and implementing the strategies we recommend to overcome them, will help you to make better choices before you put your existing home on the market.
1. Unrealistic Expectations.
Most of us dream of improving our lifestyle and moving to a larger home. That's natural. The problem arises because there is often a disconnect between what we want and what we can afford.
Before setting yourself up for possible disappointment down the road, it is essential to carefully and thoroughly analyze your financial position (equity in your present home, borrowing capacity, cash reserves, etc.) to gain a clear picture of the maximum price range that you can afford to consider in your new home.
Calculate a best case and worst case scenario for the proceeds you can expect to receive from the sale of your present home. If you can make your plans work based on the worst case, great. Anything better than worst case is icing on the cake.
If you want to get the best price for your present home, you want to put it in the best possible light in the prospective buyer's eyes. These fix-ups don't necessarily have to be expensive. But even if you do have to make a minor investment, it will often come back in the price you are able to get when you sell.
If possible, complete the fixups before putting your home on the market.
3. Not selling first
In nearly all cases, it is better 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 found 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, another option could be renting your home and putting it up on the market later - particularly if you are selling a smaller, starter home. Caution is needed - even in Canada, there may be tax consequences from choosing this option, so you should seek advice on how to minimize any tax liability that could result.
Pre-approval is a free, simple process and critically important step in the process that many homeowners fail to use to their advantage. Getting pre-approved 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.
From the seller's perspective, your offer will be viewed far more favorably by a seller. Often, a seller will accept a lower price and less favourable terms is he is dealing with a qualified buyer.
5. Getting caught in the classic Real Estate Dilemma
Your biggest dilemma when buying and selling is deciding which to do first. Earlier, we advised you to sell first if it was possible to do so.
We can work with you to solve the dilemma. Our unique
TRADE UP PROGRAM eliminates the problem 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, we will buy your home under mutually agreed upon terms so you can make your move free of stress and worry.
6. Failing to coordinate closings
Real estate transactions are complex and involve a lot of people with different responsibilities: buyer, seller, new mortgage lender, old lender, lawyers, notaries, appraisers, inspectors. To further complicate matters, most of these people are working under time pressures that tend to create mis-steps and miscommunication.
As Realtors, we coordinate the efforts of all concerned to ensure that the transaction proceeds smoothly and as planned.
