Thinking about maybe making a move in 2017? If you fit into one of these common “we need to move” scenarios below we want to share with you the 3 key pieces of information you’ll need before you decide.
Common “we need to move” Scenarios:
“Let’s down size. Our house has gone up a lot in value, lets cash some of that out and get a smaller home that still meets our needs. This way we can have a strong cash cushion, have more money for travel and not have so much of a house payment”. We have a current client now that is selling their $830k house now and getting a $630k house that’s almost as big. It’s a “Zero Energy Now” home so too they won’t have any utility costs. They’ve cashed out nearly $200k after selling expenses and their monthly payment will go down significantly because of lower taxes, insurance, loan payment and utility bills!
“We need more space! When we bought this home we were a young couple with no kids. Now we have 2 young kids and we’re crammed into this small town home with no space. We need more bedrooms and storage!” We hear this one a lot. We’ve helped quite a few buyers cash out on the great appreciation in their town homes or row homes and move up to single family homes with a little more space and a yard. We encourage buyers to get the home they can afford and the home that should meet their family needs for a long time to come (it costs to much to keep moving!)
“We want to build our “forever” home. We’ve lived in resales and they were fine but we want to pick out exactly what we want and build something that we can stay in long term.” We help people with new builds all the time and they’re great options for people who want to pick out all their finishes and can be patient as they wait for the home to be built. Here’s a video series I just shot showing you this process from A-Z!
“We should buy a rental property and diversify our investments, we’re really heavy in the stock market”. OK this one isn’t exactly a moving scenario, but getting assistance buying a rental is a common request from our clients & we’re happy to help. We personally have rentals so we know all that it involves and we’re happy to help others who see it as a way to build wealth long term. No get rich quick schemes here, but over time nothing has built more wealth than real estate investment.
Ok, so you’re thinking maybe this is the right time for you to make a move. We’re happy to help you through that process.
3 Pieces of Info You Need to Know Before Moving in 2017
1 – Does what I want exist in today’s market at a price I want to pay?
I put this as item number 1 because if what you want to buy next doesn’t exist at a price you want to pay then the rest of the steps don’t matter. Yes, you’ve been very excited that your home has appreciated but while that was happening the rest of the market went up too!
When I meet with clients to discuss what they’re looking for my first step is to help them review what’s out there that fits their needs. Sometimes they’re excited to find that what they want exists and they are fine with the price. Great! But other times they realize that what they want is way more than they want to pay and they decide to stay put for the time being. That’s fine too, better to stay put than to make a move that will stress you out financially.
Start with this step before you spend your time diving too deep into the other details. I can help you assess your options through sending you listings online or taking you on a home tour to see what’s out there.
2 – How much cash can I get from the sale of my current home?
If you’ve made it to this step congrats, that means that the answer to question #1 above was yes and you’re excited to potentially make a move. But before you can do so you need to know how much cash you’ll have from the sale of your current home to put towards your next home.
To figure that out you need to understand your home’s current market value, how much you’ll receive after all the selling costs and also how much you may owe in taxes on the gain from the sale of your home. Lets touch on each here.
A real estate broker can help you figure out your current market value. My personal process is to come to your house, complete a Comparative Market Analysis (this is a valuation of your home based on recent similar sales in your area) and then provide you with a realistic value range.
With the value range I also provide a detailed explanation of all the selling expenses. (Note: If I’m helping you with the purchase of your next home I’m happy to sell your current home for a discounted commission).
Lastly, I can connect you with a tax professional to see if you have any taxes due on the gain from the sale of your current property. In general, if you’ve lived in your home as a primary residence for more than 2 years you don’t have to pay taxes on the gain from the sale. (There are limits and exceptions – you should still run this by your tax pro!)
Once you have all this info you will know how much cash you’ll walk away with from the sale after all selling expenses and any taxes owed.
3 – Can I qualify for the mortgage on the new house?
Now that you know what you want to buy (the homes you identified in question 1 above) and you know how much cash you have to put down on the new home (because you’ve done everything in question 2 above) you can now figure out how much you need to borrow on the new home. Do you qualify for a loan of that amount? You’ll need to talk to a mortgage lender to find out. Interest rates are up lately (although still historically low) and that means you have a little less buying power than you did previously. Make sure you talk to a lender at this point and get a strong pre-qualification letter in place. We have some great lender partners if you want a recommendation.
So that’s it, if you like the answers to all 3 questions above then you are ready to make your move!
We’re happy to help you answer all of these 3 questions and help you with your move if you decide the time is right. There is no obligation, we’re just here to give you the information you need to make the best decisions possible.
If you think now is the right time and you want to see the whole process check out this Home Buying Guide we put together for you. It shows you the entire resale home buying process and gives you tips and insights based on current market conditions.
Let us know if you want to meet and get started. We prefer to meet as early in the year as possible to help our clients prepare before the Spring busy season begins.