October 2024 Homeward Bound Newsletter
Moving Up?
6 Mistakes to Avoid When Trading Up to a Larger Home 6 Mistakes to Avoid Unlike the experience of buying a first home, when you’re looking to move-up, and already own a home, there are certain factors that can complicate the situation. It’s very important for you to consider these issues before you list your home for sale. Not only is there the issue of financing to consider, but you also have to sell your present home at exactly the right time in order to avoid either the financial burden of owning two homes or, just as bad, the dilemma of having no place to live during the gap between closings. Six Strategies In this report, we outline the six most common mistakes homeowners make when moving to a larger home. Knowledge of these six mistakes, and the strategies to overcome them, will help you make informed choices before you put your existing home on the market. 1. Rose-coloured glasses Most of us dream of improving our lifestyle and moving to a larger home. The problem is that there’s sometimes a discrepancy between our hearts and our bank accounts. You drive by a home that you fall in love with only to find that it’s already sold or that it’s more than what you are willing to pay. Most homeowners get caught in this hit or miss strategy of househunting when there’s a much easier way of going about the process. For example, find out if your agent offers a Buyer Profile System or “Househunting Service,” which takes the guesswork away and helps to put you in the home of your dreams. This type of program will crossmatch your criteria with ALL available homes on the market and supply you with printed information on an on-going basis. A program like this helps homeowners take off their rose-coloured glasses and, affordably, move into the home of their dreams. 2. Failing to make necessary improvements If you want to get the best price for the home you’re selling, there will certainly be things you can do to enhance it in a prospective buyer’s eyes. These fix-ups don’t necessarily have to be expensive. But even if you do have to make a minor investment, it will often come back to you ten-fold in the price you are able to get when you sell. It’s very important that these improvements be made before you put your home on the market. If cash is tight, investigate an equity loan that you can repay on closing. 3. Not selling first You should plan to sell before you buy. This way you will not find yourself at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below-market value because you have to meet apurchase deadline. If you’ve already sold your home, you can buy your next one with no strings attached. If you do get a tempting offer on your home but haven’t made significant headway on finding your next home, you might want to put in a contingency clause in the sale contract which gives you a reasonable time to find a home to buy. If the market is slow and you find your home is not selling as quickly as you anticipated, another option could be renting your home and putting it up on the market later - particularly if you are selling a smaller, starter home. You’ll have to investigate the tax rules if you choose this latter option. Better still, find a way to eliminate this situation altogether by getting your agent to guarantee the sale of your present home (see point number 5 below). 4. Failing to get a preapproved mortgage Preapproval is a very simple process that many homeowners fail to take advantage of. While it doesn’t cost or obligate you to anything, preapproval gives you a significant advantage when you put an offer on the home you want to purchase because you know exactly how much house you can afford, and you already have the green light from your lending institution. With a preapproved mortgage, your offer will be viewed far more favorably by a seller - sometimes even if it’s a little lower than another offer that’s contingent on financing. Don’t fail to take this important step. 5. Getting caught in the “Real Estate Catch 22” Your biggest dilemma when buying and selling is deciding which to do first. Point number 3 above advises you to sell first. However there are ways to eliminate this dilemma altogether. Some agents offer a Guaranteed Sale “Trade-Up” Program that actually takes the problem away from you entirely by guaranteeing the sale of your present home before you take possession of your next one. If you find a home you wish to purchase and have not sold your current home yet, they will buy your home from you themselves so you can make your move free of stress and worry. 6. Failing to coordinate closings With two major transactions to coordinate together with all the people involved such as mortgage experts, appraisers, lawyers, loan officers, title company representatives, home inspectors or pest inspectors the chances of mix-ups and miscommunication go up dramatically. To avoid a logistical nightmare ensure you work closely with your agent.
New Homes vs. Resale
NEW HOMES: 10 Tips To Save You Time and Money The Homebuyers’ Guide to NEW HOMES Read This BEFORE You Visit Your First Model Home! When shopping for your home, you’ll discover that most homes on the market are resales. Yet, one out of four homebuyers purchases a new home. Both new homes and resales offer advantages. Before you make a decision, let’s . . . COMPARE THESE POINTS! New Homes offer innovative use of space and style greater energy efficiency a choice of options and upgrades everything is new, and modern. VERSUS Existing Homes on average they are less expensive often they are in established neighborhoods with mature landscaping homes have already settled, eliminating possible problems that arisefrom this happening after the purchase of home As you can see, there are advantages to both. Most people consider both new and existing homes before they decide to purchase. Should you be thinking about buying a new house, here are 10 points to consider before you visit your first model home. 1. Get in Touch with Your Agent. Before you visit your first model home, sit down with your agent and do your homework. You’ll want to be prepared so that you can determine a comfortable price range for your new home. Determine a Comfortable Price Range If you own a home, you’ll first need to know the net proceeds from its sale in order to determine how much cash you’ll have to work with. Don’t simply estimate this but carefully calculate every possible selling cost. If you’re a first time buyer, you’ll need to first qualify your income. Determine the size of your downpayment, then work out a monthly debt load so you can determine a comfortable price range. 2. Sellers’ Agents Versus Buyers’ Agents. Here’s a good point to remember. The sales agent in the model home represents the builder, not you. They are known as sellers’ agents. As a buyer you can work with a buyers’ agent at no additional cost. It’s his/her business to best represent your needs by being knowledgeable about home construction, warranties, financing, differences in pricing, quality, even lot selection so that you get the best value for your money. 3. A Builder For All Reasons. Like all tradesmen, builders vary in their fields of expertise. For example there are builders who specialize in craftsmanship, others who are known for their innovative use of space, and those who offer below-market financing or customer attention during construction and after move-in. Determine your own specific needs or preferences then shop around for a builder that will best address your requirements. 4. Get the Facts About Your Builder. Before making a final decision, it is wise to check out the reputation and financial strength of the builder. Get “spec sheets” on home features covering everything from floor plans to energy efficiency, including lot availability and delivery of your home.* 5. Check Out the Neighborhood. Learn as much as you can about the community. Discover what amenities it has to offer. Investigate if financial reserves have been set aside to build or replace major amenities like schools or community roads Find out from local land-use officials what else is planned or could be constructed in the area, especially where vacant land is applicable. Review the rules for the homeowner’s association, or find out if one will be set up. Think of how you will be affected by commuting routes and times. 6. Choosing Options and Upgrades. The least expensive the base price of the house is, the more options and upgrades you can add without fear of overpricing it for the neighborhood. Options are items the builder installs during construction, such as adding usable space like a sunroom or a powder room. These features can add the most to the resale value of your home. Upgrading means selecting quality above “builder standard” such as carpeting, ceramics, detailing, kitchen fixtures and appliances. Be sure to take advantage of builder incentives that offer free upgrades or credit off the sale price. Remember, you can add a deck, finished basement or landscaping later and sometimes for less money. 7. Negotiations. Often buyers don’t realize that there may be room for negotiating price, upgrades or options. For example, you have some scope for negotiating with the builder if s/he has a completed a home but hasn’t sold it. Also some “premium lots” are priced higher and are sometimes saved to be sold last. Keep in mind that typically, all lots cost the builder the same, so be sure to enquire about lot pricing. Builders may offer discounts or special financing to help close a sale. 8. Be Sure the Contract Works in Your Favor! When spelling out the particulars of an agreement with your builder, ensure you protect yourself by having safeguards written into the agreement, such as: placing your deposit in escrow detailing your upgrades; allowing you access to the construction site to check on progress; a 30-day advance notice of the closing date. an explanation of what the fine print means in the warranties of the builder and manufacturer. 9. Financing — What’s Best for You? Some builders, especially in high-volume communities that place large numbers of loans, can offer special financing packages. However, because “home loan” lending is highly competitive, you have many financing choices other than those being offered by the builder. Shop around for everything, from rates to lender fees. Appraisals, inspections, surveys, attorneys and closing fees can vary as well. 10. Just Because it’s New... Doesn’t Mean it’s Perfect. Yes it’s new and typically it’s built with modern materials that are durable, low maintenance, stronger, quieter, and safer. But because nothing is perfect, even if it’s new, consider hiring a reputable, licensed home inspector. Then create a builder “punchlist”, from what you’ve learned to address any problems before closing. Consider budgeting for items to be modified or added later on. Many new home buyers use a real estate agent to help them negotiate the best price and terms with the builder. Immediate Delivery - New HomesBuyer Advantages Your Builder May Not Reveal! Here’s a fact that you may not be aware of. Some builders have newly-constructed homes available for immediate delivery. Usually these homes are ready to move into within 30 days. Even if some builders are eager to sell, they’ll probably keep that knowledge to themselves. Immediate delivery homes are often available for various reasons: the community, where new homes are being constructed is nearly complete, so the builder proceeds to have the on-site-contractors build “spec” homes (homes built on speculation for sale) on the last lots; the model home is for sale; the contract on a home has fallen through; builders include constructing homes for immediate delivery for buyers who are relocating or who have sold their previous home and need one to move into quickly. Immediate delivery homes may be more desirable because, sometimes builders offer financing incentives or free options. This may be done in place of chopping prices to appeal to buyers purchasing later in the building phase. An immediate delivery home is an advantageous way to purchase a home if you need to move in quickly, or need a physical space to walk through and see before you sign a contract. Be sure to enquire.
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