6 Mistakes to Avoid When Trading Up to a Larger Home

6 Mistakes to Avoid When Trading Up to a Larger Home

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 important for you to consider these issues before you list your home for sale.

Not only is there 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.

6 Strategies

In this report, we outline the six most common mistake home owners 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 there’s sometimes a discrepancy between our hearts and our bank accounts. You drive by a home - you fall in love – then you find out it’s already sold or it’s more than what you are willing to pay. Most home owners 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 real estate 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 cross-matches your criteria with all available homes on the market and supplies you with printed information on an ongoing basis. This type of program helps home buyers take off their rose-colored classes 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 even necessarily have to be expensive. But even if you do have to make a minor investment, it will often come back to you ten-fold in the price you are able to get when you sell. It’s 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 5 below).

4. Failing to Get a Pre-Approved Mortgage
Many home owners fail to take advantage of pre-approval and it is a very simple process. While it doesn’t cost or obligate you to anything, pre-approval gives you a significant advantage when you put in 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 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, and/or pest inspectors), the chance of mix-ups and miscommunication goes up dramatically. To avoid a logistical nightmare, ensure you work closely with your agent.