Making the decision to sell your home and buy another is very emotional. If you are anything like my wife, you don't like giving up what you currently have due to the sentimental feelings associated with living in your home. If you are anything like my mother-in-law you just don't like change, period. If you are anything like me you're concerned with the costs associated with buying a new home, the worry of a larger mortgage or higher utility bills and such. Any way you look at it, selling your home and buying another one is emotional. But that doesn't mean that you have to make emotional decisions during the process. Read the information below and arm yourself with the knowledge to make smart decisions during one of the most important and emotional times of your life.
Movin' on up!
Most of the time when homeowners make the decision to sell their house and become repeat buyers the reason is for a bigger and/or better home. When buying a bigger (or more expensive) house there are things to consider which a lot of times are overlooked.
Mortgage payments: When repeat buyers buy a larger house with a larger mortgage it translates into a larger mortgage payment. Most people understand this so it is not much of a surprise. However, there are some that don't think about it; they just get caught up in the whole process of buying "bigger and better" that they don't think about how they are going to pay for it.
Property taxes: Taxes are based on the assessed value of the home. The more the home is assessed (by MPAC), the higher the taxes you are going to pay. Don't guess at how much the taxes are going to be, ask your Realtor -- they have the information available to them.
Utility bills: More square footage means more rooms, bigger rooms and more air above the floors. This means that the heating costs are going to go up. Repeat buyers don't usually think about this, but it can make a big different at the end of the month. In addition to heating costs the electricity costs are likely to go up. Repeat buyers often think that they can keep their electricity bill the same because they're still only going to use one room at a time. This is wrong! In order to properly budget, you should figure out what your utilities are costing you per square foot of floorspace. Then multiply that number out by the square footage of your new home. This will most likely be very close to what you are going to end up paying.
Get pre-approved and lock in your rate.
Take a look at the pre-approvals page this site and you will find there are many benefits of getting pre-approved; these benefits also apply to repeat buyers. Getting pre-approved should really be the first thing that you do when you are considering selling your home and buying another one. Even though you know that you are going to have no problem getting approved for a mortgage, it's still really importanted to get pre-approved. Take a look at the pre-approvals page and you will see why.
Find a Realtor you can trust and list your home.
I always recommend to my clients that you should have a Realtor that you can trust. Don't just pick the Realtor that is selling the house you want to buy. Take the time to go out and find a Realtor BEFORE you start looking at homes. Be careful when it comes to Buyer Representation Agreements as there can be drawbacks to signing one. A B.R.A is designed to protect Realtors from wasting their time. They serve a great purpose as many people do not consider the time, effort and cost involved with serving clients. These agreements basically guarantee that if you buy a home within a certain length of time, within a certain geographical area that you agree to let them handle the purchase for you so that the Realtor can receive the commission for the sale. If you end up buying a house using a different Realtor or even privately, you are agreeing to pay them a set commission rate based on the price of the house that you buy (or a flat fee).
It is understandable why Realtors today get them signed, but here are a couple of tips for you to consider:
- Length of time: Don't sign agreements that are long, I would keep it to 3 or 6 months at the most. I've seen them as long as 1 year but I think that is way too long.
- Realtor you can work with: Make sure you like the Realtor before you sign the agreement. There are a lot of cases where people start looking at houses with their Realtor and realize they don't like them or worse, can't trust them. Make sure you can work with that Realtor because you're stuck with them once you sign a B.R.A.
- Geographic area: Don't take a vague geographic description like "Ontario" or "South Western Ontario". I've had clients looking within the city limits of London, Ontario and then found that they didn't like anything. They decided to look in Brantford, Ontario (a completely different area) but they were forced to use a Realtor that didn't know the city because their B.R.A. said "Southern Ontario" and was for 1 year in length.
The best thing to do is to sign a B.R.A. that is setup for a specific region (ie. Hamilton, Ontario or Toronto, Ontario). In addition, make the length of the agreement for a couple of weeks to start. Suggest to your Realtor that you have no problem signing an agreement with them for two weeks to "test them out" and if you feel that you can work with them then you will sign one for a month at a time after that. Tell them that you will put a clause in the B.R.A. that says if you buy a house that they show you, then you will use them as the Realtor on the deal, even tell them that you will give it up to 6 months or something after they show you the property. This will show them you're not trying to side step them but that you also don't want to be locked in.
It's a good idea that you list your home with the same Realtor as you're trying to build a relationship with that person and you don't want any hard feelings. However, make sure the Realtor is experienced at selling homes, and make sure they sell a lot of homes. Do your homework before listing. Not all Realtors are created equal and some don't work very hard when it comes to their listings.
Place a conditional offer.
Once you find the house you want, place a conditional offer and buy it. Take a look at the First Time Home Buyers page to see the conditions that you should put into your offer. All of the conditions are the same but there should be one extra one. Make your purchase agreement conditional on the sale of your house. This will protect you in the event your house doesn't sell in time, you have "an out" of the contract without getting sued.
Finalize your mortgage financing.
On the First Time Home Buyers page it lists the condition of financing (see that page for more details). Once you've put in the offer and it is accepted, this is the time to get the mortgage finalized. Have your Realtor send my office the purchase agreement and the MLS listing. I'll take it from there and finalize the mortgage for you.
Sell your house and move in.
Once the mortgage is finalized all you have left to do is sell your house and then move in. Don't get sucked in to the whole "my house is worth more thing". Get the best deal that you can get for the house and move.
I've actually seen people reluctant to sell for the sake of $500. In the end, as yourself if the new house you bought was $500 more, would you still have bought it. In almost every case the answer to this question is yes. So, sell the house and move on! Everyone wants the most for their house, and everyone buying wants a deal. If you're dealing with a Realtor that you trust, listen to them and take their advice on the subject; they've got the experience to back them.
Why you should use Jim Thornton as your mortgage broker?
Using a mortgage broker gives you an advantage over any bank employee. Bank employee's have to sell their products. Their told that they need to get the highest rate that their customers are willing to pay. When you deal with me, I represent your best interests whether that is with Bank A, B or C. Therefore I'm going to make recommendations that are best for you, not best for the bank because I am not an employee of the bank.
Call today toll free at 1-866-257-0158 and let me handle your next mortgage as a repeat buyer.