There comes a point in time in most people’s lives when they outgrow their first home or are looking for a lifestyle change, and they start thinking about moving up in the real estate market.
Perhaps your family is growing or working from home has you thinking about how nice it would be to have more space and a larger home. Maybe your lifestyle has changed and living downtown in a condo is no longer as appealing as it was when you bought your first condo.
If you are going to be selling your first home and purchasing a larger home, then you are considered a move-up buyer. The benefit of being a move-up buyer is that you have been through the process of buying real estate and it’s likely that you are in a better financial position then when you bought your first home. Your income has most likely increased, and you should have more equity in your home which puts you in a good position to explore larger properties.
If moving-up in the real estate market is on your mind then make sure to consider the following prior to starting the process.
How Much Can You Afford?
Sure, it’s fun to cruise the internet looking at beautiful MLS listings and imagining yourself living in them. Before you get too excited, make sure to set a realistic so that you know exactly what you can afford before starting your search.
You’ll need to find out how much mortgage you can afford and what the monthly payments look like. Ultimately, you’ll need to consult with a lender who will solidify financing for your purchase. However, a good place to start is by running the numbers through an online mortgage calculator. This will help to give you an idea of a purchase price that you’re comfortable with: Mortgage Calculator
Also, remember to take into account the incidental costs like home insurance, maintenance fees, property taxes, and the cost of home upkeep.
How Much Is Your Current Home Worth?
To set a budget for your new home, you will need to know how much you will be able to sell your current home for. A good real estate agent can put together a comparative market analysis (CMA) which is a report that establishes the current market value for your home. Make sure to get this done early in the process so that you can start planning with some hard numbers.
Have You Considered the Costs of Buying and Selling? ?
Selling and buying is expensive – there are additional costs on top of the purchase price that you must consider. There are land transfer taxes, legal fees, real estate commissions, moving costs, utility set-up costs. If you’re moving into a larger property, you may also need to budget for furniture and decor. Unless you’re moving into a turnkey property, make sure you set a realistic budget for any upgrades or renovations that might need to be done. If you’re going to make a move, make sure that you make it count and that you are moving into a home and neighbourhood that you will be happy in long term.
What Type of Property and Neighbourhood?
It's important to consider what type of home and the neighbourhood that you are accustomed to and how changing property type or neighbourhoods can impact your lifestyle. Are you used to living in a condo building where there is very little upkeep and maintenance required by the owners? Are you considering moving from a walkable urban neighbourhood to a more car dependent residential neighbourhood? Make sure that you are fully aware of what’s involved with changing neighbourhoods or moving into a larger property and how it will affect your lifestyle.
Should I Buy or Sell First?
Usually, the two biggest concerns for move-up buyers are “What if I purchase first and my house doesn’t sell in time, and I’m stuck with two properties?” and “What if I sell first and I’m not able to find the right house in time and I don’t have a place to live?”. When you are buying and selling, you must consider what the market conditions look like in the neighbourhoods you’re buying and selling. Are we in a hot market and properties are selling in a matter of days? Is the market more balanced and properties are sitting on the market for a little longer? A good real estate agent will explain market conditions and lay out the pros and cons of buying or selling first to help you come up with a gameplan that you are comfortable with.
How Long Do I See Myself in this Property?
It’s impossible to predict the future but try to envision what your life will look like in a few years. Are you planning on starting a family? Would you like room for an in-law suite? Is it possible that you’ll be empty nesters? Think about what you expect your life to look like in 5 years and whether the home and neighbourhood will be right for you then.
What Do I Need to Do to Get My House Ready to Sell?
Every seller wants their house to sell quickly and hopes to maximize their sale price. It takes more than luck to make this a reality. Selling quickly and for a great price involves careful planning and knowing how to present your home to potential buyers. Cleaning, decluttering, painting, landscaping, staging are just a few common tasks involved in getting a home ready to sell. A real estate agent can provide you with professional advice and help coordinate everything that is involved in preparing your home for sale.