Quick Tips for Move-Up Buyers Post-Pandemic

If you’re a homeowner looking for a bigger house or asking yourself if you’ve outgrown your current home, then you’re probably what we call a “move-up buyer.” For example, are you considering moving up because you’re looking for a shorter commute, a better school district and neighborhood, moving due to new career prospects, or simply for some additional space? Whatever your reason, we’re here to help!

How Has the Pandemic Changed the Real Estate Market?
Historically low interest rates and the necessity for additional space have significantly influenced the home buying process for the better part of 2020 and 2021. During the pandemic, homeowners have realized the importance of having flexible spaces in their homes. This change has forced buyers to rethink their design choices and trade ideas like an open concept floor plan for more functional and versatile areas. Further, buyers are leveraging technology for their safety and building a high-quality living experience.

Amidst this highly competitive real estate market, buyers are also juggling multiple decisions around their desired home must-haves, price points, and the post-pandemic realities.

In addition, as more and more companies delay their return-to-work timeline, the remote work lifestyle continues to flourish. Which in turn, is encouraging buyers to consider moving up to larger houses to accommodate their families’ growing needs. This can include things such as a dedicated home office space, home gym, quiet space for online learning, an outdoor area, and more. As it turns out, having more flexibility around your work plays out in your favor as you’re no longer tied to a specific location.

So Where Do You Begin?
If the above sounds like you, you may be a move-up buyer! But, now what?

As a homeowner, the process of buying a home isn’t new to you, but as a move-up buyer, there are several moving parts that you need to think about and keep track of. Learning about some of the basics can help you avoid some common financial pitfalls and get you excited about the home-buying process.

So, here are some quick tips to keep in mind as you plan your big move!

1. Build the Right Team
Browsing for homes on the market may seem easy and convenient, but there’s a chance you might miss out on some of the off-market inventory if you don’t have the “insider” connection.

Many times when homes aren’t listed on the market yet, there’s a possibility that your real estate agent might be aware of those deals. Such homes can save you time, effort, and bypass expensive bidding wars. You can start by teaming up with a trusted real estate agent to leverage their connections and expertise as they help you find your dream home.

Also, remember that buying a home involves accounting for a ton of variables all at once. So when you collaborate with a team of professionals with a proven track record, they can offer great value every step of the way and ensure you make the right moves at the right time.

2. Understand Your Needs
During the pandemic, your home transitioned from a habitable space to a functioning office, your child’s classroom, a gym, a place for entertainment, and so much more. So, take the time to identify your priorities for your move-up home.

Start by creating a list of your must-haves and nice-to-haves. Do you really need a finished basement or quartz countertops? A list can help you answer those questions before you consult with your real estate agent to narrow down your wish list and set realistic goals within your budget.

3. Create a Budget
It’s exciting to look forward to your big move into a more valuable house, but just like the first time around, it’s crucial to set a realistic budget from the get-go. You need to have a budget to understand how big a home you can afford. Affordability has been a common concern for most buyers during this time.

Your move-up home will likely include a higher down payment, mortgage payment, taxes, homeowners’ association fees, home insurance, utility bills, and maintenance costs. Some other expenses that you need to take into account are closing costs, real estate agent commissions, moving costs, etc.

Another thing to determine is the market value of your current home. Some buyers grossly over-value their home’s worth, while some are pleasantly surprised to learn how much they could pocket from the sale. However, for the most part, the value of your home will rely on the existing market conditions in your area at the time of the sale.

It’s a good idea to consult with a home-buying expert to understand your best options and develop a budget before you begin your search.

4. Get Pre-Approved
As a former buyer, you understand the importance of creating the best first impression for your prospective seller, and getting pre-approved by your lender is the easiest way to get the ball rolling.

Simply put, a pre-approval letter states the maximum amount your lender is willing to lend you. Getting pre-approved can be considered as important as setting up a preliminary budget as it offers additional benefits during the buying process. It demonstrates your preparedness and sincere interest in pursuing the deal with your seller.

Based on the expected earnings from the sale of your current home, your lender will make a note of the amount you wish to put toward the down payment for your next home and produce a pre-approval letter for the amount you qualify for.

Some lenders also offer “Lock and Shop” options in order to secure a better interest rate as you go through the process. Get in touch with us to see how we can assist you in getting pre-approved.

5. Understand Your Financing Options
In addition to getting pre-approved, consult with your lender to learn about the best financing options available for move-up buyers. Lenders that specialize in the move-up buying process can create a plan that’s right for you. Further, these financing options can reduce the temporary financial strain on you during the listing and home-buying process.

Here are some of the most common and popular financing options available for move-up buyers:

• FHA Loans
• Bridge Loans
• HELOCs (Home Equity Line of Credit)
• Jumbo Loans

Deciding Your Game Plan – Should You Buy or Sell Your House First?
As a move-up buyer, you most likely have this question on your mind—should you buy or sell first? Sadly, there’s no straight answer to that question. It entirely depends on your personal situation and preference.

With either option, you run the risk of selling your current home and waiting until you win a move-up home, or you buy your next home, but the sale of your existing home falls through, creating a ton of financial distress.

So, what do you do?

For starters, if the homes in your area are selling as soon as the listing hits the market, then the “buy first” strategy could be the right choice. In this approach, you could take the time to shortlist your favorites, sort out your temporary housing options, all while living in your existing home. Generally speaking, this type of move-up requires a bridge mortgage.

In contrast, if your finances are tied, and you can’t afford to make simultaneous mortgage payments on two properties, then selling your current property first might be the way to go. Selling first can give you the negotiation power to speed things up while buying your next home, as you’ll know the exact price of your home and can mobilize funds much faster.

Needless to say, an experienced real estate agent and a knowledgeable lender can guide you on your decision to buy or sell first.

Final Thoughts
Your decision to move up is contingent on several factors, including your financial situation, current market conditions, personal preferences, and so on. Planning ahead and working with a knowledgeable team can ensure the entire process is as smooth and seamless as it can be.