Unlike the experience of buying a first home, when homeowners are looking to move up, and they already own a home, there are certain factors that can complicate the situation. It’s important to consider these issues before listing a home for sale. Not only is there the issue of financing to consider, but they also have to sell their 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.
There are six common mistakes homeowners make when moving to a larger home. Knowledge of these six mistakes and the strategies to overcome them will help homeowners make informed choices before putting their existing home on the market.
First, remove the rose-colored glasses. Most people dream of improving their lifestyle and moving to a larger home. The problem is that there’s sometimes a discrepancy between their hearts and their bank accounts. They drive by a home and fall in love with it, only to find that it’s already sold or that it’s more than they can afford. 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 the real estate agent offers a buyer profile system or a house-hunting service, which takes the guesswork away and helps to put buyers in the home of their dreams. The program cross-matches the homeowner’s criteria with all available homes on the market and supplies them with printed information on an ongoing basis. The program helps homeowners take off their rose-colored glasses and move affordably into the home of their dreams.
Next, they fail to make necessary improvements. If a home seller wants to get the best price for their home, there will certainly be things that will enhance it in a prospective buyer’s eyes. These fix-ups don’t necessarily have to be expensive, but even if they do have to make a minor investment, it will often come back tenfold in the selling price. It’s important that these improvements be made before putting the home on the market.
Moreover, not selling first is a mistake. If cash is tight, homeowners should plan to sell before they buy. This way they will not be at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below-market value because they have to meet a purchase deadline. If they’ve already sold the home, homeowners can buy their next one with no strings attached. If they do get a tempting offer on the home but haven’t made significant headway on finding their next home, a homeowner might want to put in a contingency clause in the sale contract which gives them a reasonable time to find a home to buy. If the homeowner finds their home is not selling as quickly as anticipated, another option could be renting the home and putting it up on the market later. They’ll have to investigate the tax rules for this latter option first though. Better still, find a way to eliminate this situation altogether by getting the real estate agent to guarantee the sale of the present home, as per point five below.
Always become pre-approved for a mortgage. Pre-approval is a simple process of which many homeowners fail to take advantage. While it doesn’t cost or obligate the buyer to anything, pre-approval gives them a significant advantage when putting an offer on a home because they know exactly how much house they can afford and they already have the green light from their lending institution. With a pre-approved mortgage, an 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.
Another difficulty is getting caught in the real estate catch-22 scenario. The biggest dilemma when buying and selling is deciding which to do first. Point three above advised homeowners 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 entirely by guaranteeing the sale of a present home before taking possession of the next one. If the homeowner finds a home to purchase but have not sold their current home yet, the real estate broker will buy the home so the homeowner can make their move free of stress and worry.
Lastly, homeowners sometimes fail to coordinate their closings. With two major transactions to coordinate together with all the people involved such as mortgage experts, appraisers, escrow officers, 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, work closely with the real estate agent.
Call (951) 296-8887 and get the information needed to make an informed, educated decision.
Questions regarding available inventory and/or other real estate matters please contact, [email protected] Mike Mason, Realtor & Broker/Owner of MASON Real Estate. DRE: 01483044, Temecula Valley resident for 30-plus years, Board of Director (2011-2017) Southwest Riverside County Association of Realtors.