Making the Move That's Right for You: Trading Up
This week we will take a look at the pitfalls to avoid and best moves to make for those families who are looking to trade up. Trading up is a term used for home buyers who already have a home, but are in the market to purchase a larger, and often new or newly upgraded, home to accommodate their growing family and changing lifestyles.
Trading Up: Challenges and Advantages
When it comes to those who are looking to trade up in the world of real estate, you'll no doubt quickly discover that you will have a very tricky balancing act --- one in which you must figure out how to max out the sales price of your current home, while trying to secure your future home before someone else out bids you and sweeps it out from under you. You'll want to lean on your Realtor for guidance on whether you should hold on for a higher sales price-point or if should you take the only-slightly-higher-than-asking offer in order to free yourself in a timely manner in order to finalize the deal on your future home.
On the other hand, you'll discover that the same forces that are working against you and making this sell/purchase balancing act a tricky process, those of tight inventories and rising prices, are also working in your favor as a home seller. Odds are that the sellers of your future home are experiencing a similar balancing act as you, so they are looking to sell in the same expeditious manner in order to finalize the deal on the new home that is waiting in the wings for them.
Trading Up: Preparing for Your Home Purchase
Your number one strategy for success? Focus on selling first! Even in this current "seller's market", most financial advisers recommend that you sell your existing home first before moving forward with a deal to purchase a new home.
- Don't out price your home: Knowing that this is considered to be a seller's market with limited inventory, one might be tempted to pad your home's selling price more than usual in order to garner even more cash that you can use as purchasing power towards your new home. Fight that temptation! Your number one goal right now is to sell your home, so limit yourself to only a 1 - 2 percent higher sales price for your current home based on comparable recent sales in your area.
- Search for new construction homes: You're trying to buy yourself time in this process without having to settle for a home that won't totally accommodated your family's needs. This is where new home construction can come into play New developments are sold on a first-come, first-serve basis without bidding wars and have a longer purchasing process --- both of these are beautiful factors that can remove the pressure of finding and securing a new home while still trying to sell your current home. Another trick here is to seek out homes that are currently under construction with no buyers attached. Often times home builders will offer incentives on these homes, like picking up the closing costs, in order to secure a buyer and remove them from inventory.
- Embrace suburban life: Many statistics and trends over the past ten years are showing a steady migration back to urban life, especially for Millennials. If you're looking to trade up, then head in the opposite direction my friend and find your home fortune in the suburbs! Sure you'll most likely uncover the additional benefits of better schools and bigger backyards, but more importantly you'll discover bargains that you just won't find in most urban home areas.
When you focus on selling your current home first and open yourself up to the options of new home constructions and suburban life, you'll discover that trading up to a larger, new home can be easier than you thought.
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