According to a recent RE/MAX Canada survey, 16 per cent of Canadians said they want to enter the housing market, or sell in order to “move up.” The high cost of real estate has made entering the market a challenge for many first-time homebuyers, but thanks to well-timed purchases and considerable equity gains, move-up buyers are in a great position right now, making shopping for a “forever home” feel like less of a stretch.
When you bought your first place, chances are you were young, strapped for cash and prepared (or at the very least, warned) to make some concessions. “You can’t have it all,” they said. “So where will you take the hit – price, location, home style?” Move-up buyers, on the other hand, typically has some savings and equity to work with, making their next move less of a compromise and more a thoughtful selection.
But move-up buyers face their own set of challenges that call for a carefully considered strategy. Here are three options for the smart move-up buyer with a plan!
Sell First, Buy Later
This strategy is ideal for the move-up buyer who doesn’t want to get stuck paying two mortgages simultaneously. Selling the existing home eliminates the risk of having to carry two mortgages if you don’t sell your existing home in time. It also reduces the chances of having to reduce your asking price if the sale isn’t happening quite quickly enough for your liking. This is a good option for move-up buyers who are banking on the proceeds of their sale to fund their new (and likely more expensive) property. By selling first, you’ll know exactly how much money you have to purchase your next home. Click here to get some tips on determining the right asking price.
Buy First, Then Sell
If homes in your area of choice are selling faster than the “For Sale” signs can hit the front lawn, also knows as a seller’s market, the “buy first” strategy might be the way to go. By buying your new home before selling your old one, you won’t feel rushed into settling for a sub-par property, or having to seek alternative temporary accommodations while you shop the market. This move-up buyer still lives in their existing home, allowing them flexibility to shop around, and continue looking until they find that perfect place, without any added inconvenience or pressure. This move-up buyer typically requires a bridge mortgage. Click here to read more about different types of mortgages.
Time and Align Your Purchase and Sale
When all is said and done, this move-up approach is the most ideal, but getting there is another story. Aligning your purchase and sale closing dates can be tricky. Remember that there are three dancers in this tango – you, the person you’re buying from, and the person you’re selling to. You’ll also have to move out and move in on the same day. In this scenario, time is your best friend and flexibility your saviour. This means you’ve planned ahead – you’ve researched neighbourhoods, gotten pre-approved for a mortgage, and you’ve started the organizing and de-cluttering process well in advance.
Your move-up strategy will depend on a number of factors, such as your financial situation, current housing market conditions, and your personal comfort level. Plan ahead and get the right advice from a knowledgeable, experienced RE/MAX agent, to ensure a smooth transaction at both sides of the offer table.
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