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 report, we 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.
1. Rose-colored glasses
Most of us dream of improving our lifestyle and moving to a larger home. The
problem is that there's sometimes 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 ongoing 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
If you want to get the best price for the home you're selling, there will
certainly be things you can do to enhance it in a 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 to you tenfold 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. If cash is tight, investigate an
equity loan that you can repay on closing.
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, another 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
4. Failing to get a pre-approved mortgage
Pre-approval is a very simple process that many homeowners fail to take
advantage of. While it doesn't cost or obligate you to anything, pre-approval
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 pre-approved
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.