5 Mistakes to Avoid When Selling One Home and Buying Another

Sharad Gupta is the owner of Gupta Realty Group and is a member of the California.com Recommended Business Program, which highlights only the best businesses in the Golden State. To be featured, each business must be highly regarded, have a unique California story, and make a positive impact in their community. 

Transitioning from your existing residence to a larger one involves a unique set of challenges, distinct from the initial experience of buying your first home. This journey entails navigating through financial planning and housing logistics. The goal is to strategically time the sale of your present home to prevent the financial strain that comes with juggling two mortgages simultaneously. Additionally, securing temporary accommodation during this transition is crucial to ensure a smooth move.

Being aware of potential pitfalls and strategies to address them can significantly aid in making well-informed decisions. Therefore, as you contemplate upgrading to a more spacious abode, it's essential to ponder these considerations prior to putting your current property on the market.

Things to Avoid When Trading up to a Larger Home

Wearing rose-colored glasses

Many of us aspire to enhance our lifestyles by acquiring a more spacious home, yet often, our financial realities don't align with our dreams.

It's common for potential buyers to set their hearts on a home only to discover they haven't secured pre-approval, or they might spot an ideal property that's unfortunately already off the market. This sporadic approach to house hunting is typical, yet there exists a more streamlined method.

Consider inquiring whether your real estate agent provides any specialized services, such as a buyer profile system or a dedicated house-hunting program. These tools are designed to simplify the search process by systematically aligning your specific needs with the current market offerings, providing you with regular updates and detailed information. Utilizing such a service can help you view the market more realistically and transition into your ideal home within your budget.

Failing to make necessary improvements

To maximize your home's selling price, consider making certain enhancements that will appeal to potential buyers. These upgrades need not break the bank; even modest investments can significantly boost your home's value upon sale.

Ensuring these enhancements are completed before listing your home is crucial, as the initial presentation can make a lasting impact. If budget constraints are a concern, exploring options like an equity loan, which can be settled at closing, might provide the necessary financial flexibility.

Not selling first

Navigating the transition between selling your current home and purchasing a new one requires careful timing. Ideally, aim to sell your home first to avoid the pressure of having to accept an offer that's below market value due to upcoming purchase obligations. Being in a position where your home is already sold gives you the freedom to buy your next home without any conditions.

However, if an attractive offer comes your way and you haven't found your next residence, consider including a contingency in your sale agreement. This clause allows you a set period to secure a new home, providing a safety net.

In a slower market where your home isn't selling as quickly as expected, renting out your property could be a viable interim solution, particularly if it's a smaller, starter home. This option may require a review of relevant tax implications.

An even more effective strategy might be to work with your agent on a program that guarantees the sale of your current home before you commit to a new one. Such arrangements can offer peace of mind, ensuring a seamless and worry-free transition to your new home.

Failing to get pre-approved for a mortgage

Securing pre-approval is a straightforward step that many potential homeowners overlook. This process is free and comes without any commitment, yet it can greatly enhance your position when looking to purchase a larger home, or any property for that matter. Pre-approval clarifies your budget, allowing you to make offers with confidence, knowing your financing is already endorsed by a lender.

Having a pre-approved mortgage can make your bid more appealing to sellers, even if it's not the highest, especially compared to offers dependent on financing approval. Therefore, it's wise to prioritize this critical step in your home-buying journey.

Failing to coordinate closings

When you're in the process of selling one home to purchase another, you're essentially juggling two significant transactions simultaneously. This complex process involves a wide array of professionals, including mortgage advisors, appraisers, attorneys, loan officers, title company staff, home inspectors, and pest control experts, which increases the potential for misunderstandings and errors.

To streamline this intricate process and mitigate the risk of complications, it's crucial to maintain open and effective communication with your real estate agent. Collaborating with a trusted agent ensures that all aspects of the transactions are well-coordinated, facilitating a seamless transition as you move towards achieving your objective of upgrading your home.