Moving up to your next home can be a tricky process. Personally, it took Maria and me almost a year to buy our current home. Through my own experience, I’ve learned to help clients focus on getting to their next house and keep the process as stress-free and fun as possible.
Moving up to your next home can be tricky, and you have to be patient. Toronto does not have a lot of land or housing inventory and finding the right house in the right location takes some skilled moves.
When it was time for Maria and me to make the move it took almost a year of regular house hunting to find a home in the neighbourhood where our kids were transferred for school. Meanwhile, I would drive 25 minutes to get the kids to school in the morning and do it all over again in the afternoon to pick them up. It wasn’t easy doing all that driving and waiting for just the right home to come along. And then, when it finally materialized, we ended up in multiple offers.
We have survived renovations, the recession, and a flooded basement. All the while, we came out way ahead of the renovation costs when it came time to move. There is something to be said about being patient and doing the work.
What are your options when buying and selling a home simultaneously?
There are three options for moving up to your next home. Each has its pros and cons. I think it is wise that you meet with me or your real estate agent to go over your options well before making the step-up move. It will take time, planning, meeting with financial professionals, and prepping your own home for sale before you even start looking for your next house.
Moving Up Option One: Find a Home And Buy It Conditional on the Sale of Your Home
Conditional sales are coming back as the market shifts from a white-hot seller’s market to a more balanced market. This is great. It frees up more starter home inventory which is desperately needed. The process is fairly easy but can be tricky. It is very important that you talk to me or your agent to really dive into how to customize this process for you.
Step One: Prep Your Home for the Sale.
Step Two: Get Initially Approved for a Loan
Part of the preparation process needs to be a deep conversation with a finance person and your realtor. How much can you sell your home for? What proceeds from the sale can be applied to your next house? What can you afford? Can you afford what you want in the neighbourhood you want?
Step Three: Look for Your Next Home.
Moving up to your second home is the hardest process you will go through. You will be extra picky. The first time you buy a house, you are typically just psyched to find a house that you can afford in a neighbourhood you like. You quickly learn what you really need in your next house. And it better include a second bathroom.
Since I’ve been through several personal purchases and sales, I have a process that gets at the heart of what you are looking for, why you are looking for this home, and how to get you through the process.
Step Four: Make an offer and get under contract on your next home. This follows your standard home-buying process. Make the offer, get it accepted, do the inspection, go through financing, and finally close on the home. With one small exception….. you have to sell your CURRENT home before you can close on your next home.
Step Five: You have five days to get your home on the market. You have five days from the time you get under contract to put your current home on the market. It is a mad rush of cleaners, photographers, handypeople, etc… Hence the more you do in advance to prep your home for sale the easier your process will go.
Step Six: Sell your house. My clients consistently sell for more money than our clients’ neighbours. Why? I help my home seller clients properly prepare their home so it shows in its best light so that buyers are excited to buy their home.
Step Seven: Remove The Condition On Your Next House So You Can Close.
Typically it can happen on the same day. For safety purposes, it is typically a day or two apart. Sellers can negotiate a bridge loan from their lender to give time to move into your new home. Be quick, interest adds up!
Pro-Tip: You need to meet with me or your sales representative (who hopefully has experience with this process?) and get your house in order before you start this process. You only have five days to get your house on the market. And it needs to be in tip-top shape.
Moving Up Option Two: Sell Existing Home, Go Rent, and Then Buy Your Next Home
The safest way to know exactly how much money you will have to make the big move is to sell your existing home first. The risk with a conditional offer is that you end up paying top dollar for your next home and can possibly be bumped from the transaction if another buyer comes along. You also have to do whatever it takes to sell your existing home which can mean selling it below market value.
Step One: Prep Your Home for the Sale.
Step Two: Get Initially Approved for a Loan
Part of the preparation process needs to be a deep conversation with a finance person and your realtor. How much can you sell your home for? What proceeds from the sale can be applied to your next house? What can you afford? Can you afford what you want in the neighbourhood you want?
Step Three: Get the Home on the Market, Get it Into Contract, and Get It Closed.
Present your home in its best light and get yourself an awesome buyer. Typically the sale process takes about two or so weeks depending on market conditions. And then expect about a 30 to 45-day close.
Step Four: Go find a temporary rental. Some of my clients lucked out and housesat for a friend of theirs who was out of town. Others rented an Airbnb. And some downsized and got a place with a six-month lease. In their overall budget, they included a line item for potentially having to buy out their lease. For example, if they found a home in month four, they still had to pay the extra two months of rent.
Step Five: Finalize Your Approval Amount – Knowledge is power. Knowing what you can afford allows you to make a smart purchase on your next home.
Step Six: Look for Your Next Home. Moving up to your second home is the hardest process you will go through. You will be super picky. The first time you buy a house, you are typically just psyched to find a house that you can afford in a neighbourhood you like. You quickly learn what you really need in your next house. And it better include a second bathroom.
Step Seven: Make an offer and get under Contract on Your Next Home. This follows your standard home-buying process. Make the offer, get it accepted, do the inspection, go through financing, and finally close on the home.
Step Eight: Close On Your New Home and Move! Yippy you made it. This process can go fast. Or it can take years. It all depends on where you are personally in the process. But do not worry. I’m here for you every step of the way.
Moving Up Option Three: Rent Your Home Back From the New Buyers
Most home sellers are unaware that they can stay in their current home after it sells by renting it back from their buyers. It’s called a rent-back offer. In this case, you would get all of the proceeds from the sale without having to move – which gives you both the time and money to purchase a new home.
Of course, the big drawback is that it transfers the risk to the buyer and most buyers are hesitant to take the risk of renting their new home and prolonging their own move-in date.
Step One: Get Approved for a Loan: Have a deep conversation with a finance person and your team about how to get approved for the next home. You might have savings. Or you might need to get a line of credit on your existing home to use as a down payment for the next home. Each person is different.
Step Two: Look for Your Next Home. Moving up to your second home is the hardest process you will go through. You will be super picky. The first time you buy a house, you are typically just psyched to find a house that you can afford in a neighborhood you like. You quickly learn what you really want in your next house. And it better include a second bathroom.
Step Three: Make an offer and get under Contract on Your Next Home. This follows your standard home-buying process. Make the offer, get it accepted, do the inspection, go through financing, and finally close on the home.
Step Four: Close On Your New Home and Move! Yippee, you made it! This process can go fast. Or it can take months. It all depends on where you are personally in the process. But do not worry, I’m here for you every step of the way.
Again, buying a home when you have a home to sell can be a tricky business. I’ve seen transactions where 3 (or more) families are all buying and selling conditionally, which creates a really long string of dominoes.
Orchestrating a transaction like that is an art form and you need a great real estate agent who can guide you through that process.
Whew, that was a lot. Do you feel prepped? Ready to make the magic happen for your next home? Regardless of these general guidelines, everyone’s process is different. I’m here to help you navigate the process and get you into your next home.
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