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Biggest Mistakes Most Smart People Make When Making a “Move-Up” Buy |
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A “Move-Up Buy” is when you have a home to sell before you buy a new home. The biggest single mistake that people make is they don’t plan. It is an emotional decision, but they make it too emotional. They decide they really want a particular house, so they go ahead and jump in on it without thinking about the logistics. What inevitably happens is people jump into it and figure it will all come together. But if you don’t have the basic building blocks to make it come together, it can become a huge problem. The second biggest mistake is not negotiating a reasonable length of time to close the sale of your house or to purchase a new home. People tend to get so excited that they want to close in 30 days. But it’s extremely difficult to make all these things come together in 30 days. So allowing enough planning time is critical. The third biggest mistake is not developing a financial plan for your future home. A lot of people will buy a house on emotion, but not fully consider their ability to financial afford the house. It’s critical to develop a financial plan with deadlines and objectives. The fourth mistake is believing that your house is worth more money than it really is. You should get an independent appraisal done to find out exactly what it is worth in today’s market. The fifth biggest mistake is failing to realize that the home inspection may reveal repairs or deferred maintenance items needing attention. When you sell your house, the buyer will more than likely have a home inspection done on the property. The home inspection may uncover something that needs to be repaired or replaced before the sale is completed, which can cost you more money. The best thing to do is pay to have a home inspection done before you put your house on the market. It also gives you an advantage when you can show prospective buyers that a home inspection was already done and what the results were. Many sellers report that the toughest part of selling a house today is all of the inspections that have to be done. You negotiate like crazy to get the house under contract, but you’re basically starting from scratch once the inspections are done. So get an inspection done ahead of time so that you will know exactly how much money you will need for repairs prior to the sale of your property. The sixth biggest mistake most people make is that they have no idea what their actual loan payoff amount is. The loan payoff and the loan balance are two different things. The loan payoff is always higher than the loan balance. When you make your mortgage payments, you pay interest for the previous month, not the following month. So if you sell your house with a $100,000 loan balance and you’re going to close at the end of September, the payment you made in September was actually for August. So when you close at the end of September, you will still have to pay the entire payment for September as well. (Don’t forget about that Home Equity Line you got to buy the new family car! That’ll also have to be paid off when you sell your house!) The seventh biggest mistake is failing to realize all of the different varieties of costs. Even when you sell your home yourself, you still might have some real estate commissions if the buyer goes through a Realtor. You will have advertising costs for selling the home. And then you will have the physical cost of moving your belongings from your old house to your new house. You could find yourself in a very uncomfortable position. |
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