Move-up buyers are in a better position than their first-time counterparts. Shopping for a “forever home” feels like less of a stretch. When you bought your first place, chances are you were young, strapped for cash and prepared (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 home equity to work with, making this next move feel less like 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 before you buy
The “Sell First” strategy is ideal for the move-up buyer who can’t afford to pay two mortgages simultaneously. Selling your property first 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 in the interest of speeding up the sale. 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.
Buy, then sell
If homes in your area of choice are selling faster than the ‘For Sale’ signs can hit the front lawn, 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 housing options while you shop the market. This move-up buyer still lives in his or her existing home, allowing them time to shop around, and continue looking until they find that perfect place. This move-up buyer typically requires a bridge mortgage.
Read: Understanding mortgages
Time and align your purchase and sale
When all is said and done, this move-up buyer 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’re researched neighbourhoods, gotten pre-approved for a mortgage, and you’ve started the organizing and de-cluttering process before the big move.
The different strategies favoured by move-up buyers will depends on a number of factors – financial situation, current housing market conditions, personal comfort level and even personality. Consider all these when making your decision. Plan ahead and work with a professional agent to ensure a smooth transaction on both sides of the bargaining table.