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 into a larger home, there are certain factors that can complicate the situation. It’s very important for you to consider these issues before you list your current home for sale.

Not only are there financing issues, but it’s also crucial to sell your present home at exactly the right time to avoid 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 article, 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.

Mistake 1: Rose-coloured 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 it’s already sold, or 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, you can find out if your buying agent offers a Buyer Profile System or House-Hunting Service, which takes the guesswork out of the equation and helps put you in the home of your dreams, instead of just the best possible option. These programs cross-match your criteria with ALL available homes on the market, and supply you with printed information and regular updates. These programs help homeowners take off their rose-colored glasses and move into the home of their dreams in an affordable way.

Mistake 2: Failing to make necessary improvements before selling

If you want to get the best price for the home you’re selling, there are things you can do to enhance it in a prospective buyer’s eyes. These improvements don’t necessarily have to be expensive, but even minor investments can come back to you ten-fold in the final selling price. However, it’s very important that these improvements are made before you put your home on the market. If cash is tight, you can investigate an equity loan that you can repay on closing the sale of your home.

Mistake 3: Not selling first

You should always plan to sell before you buy. This way, you won’t 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. Once you sell your home, you can buy your next one with no strings attached. If you do get a tempting offer on your current home, but haven’t made significant headway on finding your next home, you can add a contingency clause to the sale contract, requesting a reasonable amount of time to find a new home. If the market is slow and you find your home is not selling as quickly as you anticipated, another option is to rent your home and put it on the market later. This option is particularly effective 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 Mistake 5 below).

Mistake 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. Once you are pre-approved, you know exactly how much you can afford, and you already have the green light from your lending institution. With a pre-approved mortgage, your offer will also be viewed far more favourably by a seller – sometimes even if it’s a little lower than another offer that is contingent on financing. Don’t fail to take this important step, as it could cost you an offer on the house of your dreams.

Mistake 5: Getting caught in the real estate Catch-22

Your biggest dilemma when buying and selling is deciding which to do first. In Mistake 3 above, we advised you to always sell first. However, there are ways to eliminate this dilemma altogether. Some agents offer a Guaranteed Sale Trade-Up Program that guarantees the sale of your present home before you take possession of your next one. If you find a home you wish to purchase but you have not sold your current home yet, the agent will buy your home from you, so you are able to move on to your new home free of stress and worry.

Mistake 6: Failing to coordinate closings

The chances of mix-ups and miscommunications are high when coordinating a home sale and a home purchase. With two major transactions to coordinate, and multiple points of contact including mortgage experts, appraisers, lawyers, loan officers, title company representatives, and home inspectors, there is always a chance that something will get lost in the mayhem. To avoid a logistical nightmare, ensure you work closely with your agent, who will keep you informed and involved.