Families move to different houses for so many reasons. A lot of considerations weigh in.
Right now, we’re going to dive into four critical conversations that you need to have when buying and selling in the same market.
To start, you should ask yourself the biggest question, “Why are you moving?”
Knowing this will align the path that you will take on moving forward.
You have to assess yourself and where you want to be in the future. Determine what will make you happy during the next period; five years, three years, two years.
What’s going to make you cheerful about your progress?
1. Seasons in Life For instance, you are a newly married couple searching for your first home together.
Before you get wrapped up in the thought of a beautiful kitchen or shiny bathroom, you have to think, "Will this house work for our future family?"
Whether it is your dream to have four golden Labradoodles or six kids or no kids, you have to make sure that your place will be conducive to raise a family.
2. Value of Location You have to understand the value of a house based on location. For some, the best place would be a two-story-house out in the suburbs, but for others, it’s a bungalow in the inner city.
It all depends on your priority. Values can be drastically different. You want to be able to understand what it is that you value the most.
It is crucial to lean on an agent or realtor to understand the actual cost of a property’s value to help you decide to buy and sell.
3. Absorption Rate The absorption rate is the months of inventory or how quickly things move. You don't want to be buying when nobody's selling, and you don't want to be selling when nobody's buying. Understanding the market where you're living right now and moving to will streamline your buying or selling strategy.
There must be coordination between buyers and sellers on buying and selling because most people have two properties. You have to make a strategy. Do you rent the current property out and buy a new one? Can you hold both mortgages?
Everybody's story is unique. It's essential to get those parameters so you can make a plan to move forward. It will provide a map of direction to where you’re going next.
4. Mortgage The government has made so many changes with regards to the mortgage. The bank wants more paperwork every year.
When buying and selling in the same market, the common misconception is that banks will approve buyers quickly because they already have a mortgage, but it’s not that simple.
Having conversations to see if you can carry two mortgages is essential. When you don't have enough equity, you need bridge financing. There are lots of different things that you need. You have to understand that you were a different person when you bought your current place than you are now, and things have changed. Investments have changed.
You might have a rental property, or you might have different stocks, or you might have kids now or other incomes or jobs or so many different variables that change everything. You have to make sure that you look at that and figure it out.
Bonus Thought - Sale of Home Condition You might consider a special clause sale – wanting to make the purchase conditional upon selling your home. That way, you can tie up a house and make sure you get it, but then, on the other side, you still are trying to sell your home.
There are a couple of things that can cause many problems when you get into that situation. It's not ideal. We don't encourage clients to do this.
And why is that?
When you're making a special clause sale, other buyers could bump off your offer at any time. But the thing is, you get emotionally invested in the house you’re eyeing. You'll be spending money on either a home inspection or a condo doc condition. That may be worth it because it could be your dream home but might not be practical.
Plus, your house has to be ready to list, usually within five days. So that also is something that needs a lot of planning.
No one's situation is the same, so it's good to unpack these in person.
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