Essential Guide to a Successful Home Sale
Do you want to upsize because you need more space, or because you want more space? Selling your home and buying a larger, nicer one can be an exciting idea, but there are some important things to consider before deciding to upsize into a new home. Many homeowners wish to upsize because they truly feel their current home is too cramped. But that feeling isn’t always due to not having enough square footage of living space. In many cases, their home feels small because of poor layout of furniture, appliances, or an overload of personal belongings. If you’re planning to upsize because you feel your current home doesn’t have enough space, take a close and honest look at your current home. Gauge whether all of your living space is being used efficiently or not. If one of your bedrooms has become a storage room packed with boxes, sports equipment and tools, or your garage is full of toys your kids have outgrown, it’s likely that your problem isn’t a lack of space, but rather an inefficient usage of it. On the other hand, you may legitimately need a larger home. If you live in a one bedroom condo, and you’re looking to start a family (or already have a baby on the way), sooner or later you will definitely need to move to a larger home. Of course, there is nothing wrong with simply WANTING to live in a larger home. If that is really what you and your family want, then go for it! However, making the distinction is extremely important, because a larger home comes with a larger amount of responsibilities and expenses. Larger homes come with more upkeep, larger utility bills, and higher taxes. Even if you sell your current home to finance your next home, you could easily end up with a larger monthly mortgage payment as well. If upsizing is for you- read on for an overview of the steps to selling your home.
Relocating for Your Career or Moving Towns?
If you’re relocating for your career or
moving to a different town for a change in lifestyle, schools, to be near
family, etc., you must first consider your timeframe and how much you realistically
can expect to sell your current home for.
If you need to sell quickly, you will need to have your home priced right
at or below comparable homes to gain the most amount of buyer interest quickly,
and not have your home sit on the market.
Set realistic expectations for your current
home value using a Comparable Market Analysis done by a real estate
professional. Consider the market where
you are going and what you will need for your next home. If homes where you are going are more expensive
than where you are, that doesn’t mean you’re going to be able to get more money
for your current home than it’s current value in your market. Planning to
purchase a smaller home or opening your home search to a wider area could help.
If you need to make an offer on a new home
contingent upon the sale of your current home, or you are anticipating needing
to sell, you should start preparing your home to hit the market as soon as possible!
Read on for an overview of the steps to
selling your home.
Looking to Downsize?
There are many reasons to downsize and
a lot to consider. Perhaps your children
have grown and moved out, you are retired, gone through a divorce, looking to
save money, or tired of maintaining a big space. Downsizing may be a great option if you plan
and take an honest look at your current home.
Truly decide what are must haves in
your next home and which rooms you don’t need.
Many people say they want to downsize because they realize they don’t
need all of their space, but when it truly comes down to it, they don’t want to
part with spaces they may only use a few times a year. Such as extra bedrooms, a formal dining room,
or an extra living room space. Remind
yourself why you want to downsize and make an honest list of the space you
realistic expectations for your current home value using a Comparable Market Analysis
done by a real estate professional. Discuss
housing options that might be better suited for your future and how much those
options will cost. Depending on your situation, downsizing does not always save
all costs. Condos and townhomes are
attractive options if you don’t want to deal with maintenance, but remember the
entire cost, including homeowner association fees, and assessments that can
change. Ask questions and use a real
estate professional that can assist you in considering all of these aspects
before you decide!
The thought of downsizing can be
overwhelming when you look around at your home and realize how much stuff you
have that will not fit in a smaller space. Start small! Begin purging one room at a time,
hire someone to help you, or enlist friends or family that can help you take a direct
and less emotional approach. Once you have less things, it is easier to
envision life in a smaller space.
7 Steps to Sell Your Home:
Now that you've considered your wants and needs, if it's time to sell your home, let's do it! Here is a 7 step basic overview to the home selling process.
1. Hire a real estate professional
2. Get your home ready
3. Price your home to sell
4. Market your home
5. Prepare for showings
6. How to handle offers
7. Get your home sold!
Should you buy your new home first, or sell your old home first?
You may have already found your dream home, and fell in love with it. You may be inclined to buy that home before you sell yours. Typically, it’s better to sell your old home before you buy a new one. By doing so, you’ll have the funds from your sale already, you’ll be able to make a larger downpayment on your mortgage, and you’ll avoid spending time with two mortgages at the same time.
If you absolutely must buy a home before you sell yours, you should at the very least do the following:
- Work with your real estate agent to get a market analysis of what you can expect your old home to sell for (do a conservative estimate to be safe). Study the current market, and see how long it takes on average to sell homes comparable to yours.
- Set up a clause that lets you list the day after your offer’s conditions on your offer are waived.
- Get a 90 day closing, so that you have enough time to sell your home.
Prepare your home to sell
Declutter your home, and have all the interiors professionally cleaned. Do all the handyman work you’ve been putting off, and get an inspection so you know for sure if there are any hidden issues with your home.
If there are any issues, get them fixed as quickly as possible.
Speak to your real estate agent for recommendations about how to stage your home. If possible, get your agent to hire a professional stager.
Be prepared to take action
At this point, you should be getting ready to list your old home, and you also have a pretty good idea of the type of home you WANT to purchase and CAN purchase.
As mentioned earlier, the best case scenario is that you’re able to get your home purchase to coincide with your home sale. This is especially important when you want to use your home sale earnings to purchase your new home, or use them to make a substantial down payment.
Of course, getting the timing right can be tricky. There are many issues to be aware of, such as:
What kind of market are you in?
If you’re in a seller’s market, there will be more buyers than homes for sale, and selling your home would be fairly easy and quick.
At the same time, that would mean a lot more competition when buying a home. You could easily lose to another buyer, or you would need to offer more money and fewer contingencies to get your next home.
Writing a contingent offer means that the purchase is contingent upon you selling your old home. In essence, this would protect you in case the sale falls through for whatever reason. And while this would seem like a good way to protect your own interests, said clause could actually keep a home seller from accepting your offer.
There are two types of contingent offers. One where your home is currently listed, but you don’t have a buyer yet, the market. The second one is when you do do have a buyer lined up, and the transaction is already in escrow, just waiting to be close.
As you can imagine, the second one will be more attractive to the home seller, since it has a high percentage of success.
So if you’re trying to purchase a home in a strong seller’s market, your best bet is to submit a non-contingent offer, or find a way to make a more competitive offer (usually by raising your offer’s dollar amount) in order to have a greater chance of having your offer accepted.
It’s very tricky to negotiate two closes in parallel. Though its possible to have a simultaneous close, you do need to have all dates aligned, and use the same escrow company for both transactions for the process to work..
In case you do end up selling your home before you buy a new one, you have to consider where you would live in the meantime. Would you get short-term rental, stay with friends or family, stay at a hotel, or negotiating a rent-back with your home buyer?
And what about your possessions? Are you going to keep them in a storage facility, or at a friend’s home? Or would negotiate with your moving company so it can store your items for some time?