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6 Mistakes to Avoid When Trading Up to a Larger Home
". . . you 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"
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.
Six Strategies
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 5 below).
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.
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