6 Biggest Mistakes Buyers Make When Trading Up Homes
When you’re in the process of trading up your Sacramento home to a nicer neighborhood or a larger house, there are some special circumstances to consider that differ from the first time you bought your home.
After talking with some of my clients, I’ve identified 6 key mistakes Sacramento buyers make when trading up homes. By knowing these mistakes and the solutions that solve them, you’ll avoid repeating them and have a much smoother real estate transaction.
Mistake #1 – Not Defining Their Budget and Goals
It’s part of the American dream to always strive for more, especially in regards to our personal residences. Yet, oftentimes there is a large difference between the size of the desire in our hearts and the size of our bank account.
All too often you find the perfect home in the perfect neighborhood, only to find out that it has already been sold or that it’s out of your price range. This happens to far too many house hunters and gets them stuck in an emotional rollercoaster of high highs and even lower lows.
BUT – there is a much easier way to accomplish your goal of trading up to a nicer Sacramento home. Ask your real estate agent if they offer any type of buyer profile system or “house hunting service” that will match up your exact criteria with the perfect home for you.
This way, your agent can use your search criteria to examine ALL available homes in the local market and update you regularly as to what’s available that matches what you’re looking for. In fact, you can get automated delivery of these search results straight to your inbox every day as new homes come on the market.
This helps to prevent homebuyers from falling into the trap of falling in love with homes that don’t match their budget or meet some other important criteria, and still be able to affordably find the home of their dreams.
Mistake #2 – Avoiding Deferred Maintenance and Repairs
A simple trick that can help you increase your budget for a new home is doing all you can to get the most for your current home. And an easy way to do this is by making the home look as good as possible in the eyes of prospective buyers.
Now, you don’t have to go out and spend $25,000 to fully remodel the kitchen, but if you spend just a little to spruce up the home here and there, it’ll return great rewards and put more money in your pocket than if you had not done them.
In fact, you can find a whole list of these repairs in my report titled “5 Home Repairs That Return Great Rewards” in my Seller’s Guide to Sacramento Real Estate. It covers everything you need to know about only making key repairs and improvements that will double your money on them when you sell your house.
And remember, these repairs need to be completed before you list your home on the open market. Otherwise, prospective buyers will use them as negotiating tools against you and it can possibly delay the sale of your home, and for far less money that you would have got otherwise.
Mistake #3 – Not Selling Their Current Home First
One of the most important rules in real estate is that you should always sell your current home before you buy a new one. The key reason for this is that you don’t want to find yourself in the undesirable situation of having two mortgages at the same time, and who knows for how long.
Also, this will put a lot of pressure of you when it comes to receive and evaluate offers, as you may be tempted to accept an offer that is well below market value or possibly doesn’t meet your other terms just because you have a certain deadline to move into your new home.
On the other hand, if you sell your current home before making the commitment on a new one, you can hold out for the perfect offer that matches all your criteria. You can get the price you want, and the terms you want, no problemo.
Another option is to put a contingency in your purchase offers that the deal is contingent upon you selling your current home first, but most sellers will dock some points off your offer because it’s not as solid as someone who doesn’t have to sell their current home first. A buyer without that obligation is more of a sure thing in the seller’s eyes.
If the market you’re living is really slow and there is lots of competition for homes, you could always consider renting your home out and selling it a later date when the market is more favorable. That may allow you to still purchase a new home, but getting two mortgages might be tough for some.
But no matter which way you slice it, the best option hands down is to avoid the situation altogether by selling your current home first. And this is something I can help you with.
Mistake #4 – Forgetting to Get a Mortgage Pre-Approval
Get approved for financing is one of the simplest things you can do to give yourself a huge advantage when looking for a new home. First off, it doesn’t cost you anything, and second it clarifies exactly how much you’ll be able to qualify for so that way you know the top line of your budget.
Also, when you’re ready to finally start making offers on homes, your offer will be viewed much more favorably by sellers and their real estate agents. It proves that you can follow through on your offer, and if they should choose they have a much higher probability of the transaction going through to close than if they choose an offer that is contingent upon the buyer obtaining financing.
Mistake # 5 – Getting Caught in the "Real Estate Catch 22"
The biggest decision the buyers have to face when trading up to a larger home when they currently own a smaller one is whether to sell first or to buy first. It’s a big decision that can have a large impact on the smoothness of your transactions and resulting stress level.
As you already read above, the obvious choice and clear recommendation is to sell your home first. But if you want to avoid even having to make this choice, there is another option you can pursue. See if your real estate agent offers a “Guaranteed Trade Up Program” of some sort that guarantees the sale of your current home before you take possession on your next one.
It’s not always available, and some special circumstances apply, but if you find a home to purchase and your current home isn’t sold yet, your real estate agent can take it off your hands in the meantime so you can have a stress-free experience in making the move.
Mistake #6 – Not Coordinating the Closings
Buying a home and selling a home are both considered major transactions, and rightly so. Trying to balance all the different steps and outside professional like agents, lenders, appraisers, inspectors and so on, it gets to be quite a handful to coordinate.
So unless you’re a logistical genius who is highly organized and able to juggle all the different steps involved in both transactions at the same time, take my advice and sell your home first. Let me help make the move to a larger, nicer home in the perfect neighborhood by helping you to sell your current home for top dollar, with the least amount of hassle, in the best amount of time.