The Definitive Guide On How To Upsize Into A New Home

Selling your old home and buying a larger, nicer one (upsizing) can be a very exciting idea. The promise of a more comfortable home can be an intoxicating one, especially when the old one is a bit on the small side. But if you’re seriously considering upsizing, it’s important that you’re well informed as to what the process involves. In this guide we dive into a few important things to consider before deciding to upsize into a new home.
Let's Dive In
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Questions to ask before defining your dream home

There are many factors that could effect your usage (and future usage) of the home you'll be living in. It's important to consider your current life situation as well as any upcoming changes you anticipate. Below are a list of some questions to consider:

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What to look for in a larger home?

There are many factors that could effect your usage (and future usage) of the home you'll be living in. It's important to consider your current life situation as well as any upcoming changes you anticipate. Below are a list of some questions to consider:

Before you start looking at new homes, talk with your spouse, children (and any family members that are moving with you) about what features you will need in your new home. 

Make a list of those features (such as a larger garage, a yard, barbeque pit), and include the number of bedrooms and bathrooms and approximate square footage you want.

Next, make a list of neighborhoods or areas in your city you would be interested in. Is there a particular neighborhood you like because of its convenient location to schools, malls, parks, and other amenities? Are you willing to move to the suburbs, where you can find better home prices, or would you rather be closer to the action, even if it costs more?

Knowing what you need (or want) in a new home will make the home hunting process a lot more efficient, and will help your real estate agent find the right property for you.

Once you know what you need in your new home, share that info with your real estate agent. The more specific your list, the better, because it will narrow down the list of potential homes to see.

You should also think realistically as to how your needs will change in the future. For example, if you already have a child, and plan on having another one, you probably won’t need more than 3 or 4 bedrooms.

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Find an Agent


Questions to ask when invterviewing Listing Agents

If you’re planning on maximizing your property’s exposure and having it listed online with the MLS, you are likely planning on hiring a listing agent to sell your home. There are many listing agents out there, but with a shifting market and emerging technologies creating a uniquely dynamic landscape, it’s important to know your choosing the right Realtor to sell your home. Below are some questions you should consider asking your potential agent:

1

What types of Marketing will be done for the property?

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2

How do you target your digital marketing campaigns?

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3

Do you still utilize hard-mail property marketing?

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4

Will you be doing an open house? If so, how will you be marketing it onlline?

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5

How will I know if my listing is getting enough exposure?

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Determine how much home you can afford

While part of the excitement of upsizing is shopping around for homes, and seeing what’s the biggest and nicest home you could technically purchase, it’s essential that you slow down and crunch the numbers before making a decision.

How much home you can afford should not be determined by the maximum amount of financing you can get. You should NEVER live “house poor.” In other words, living in a situation in which you’re just barely able to pay off your monthly mortgage payments. 

Life is uncertain, and if you live house poor, even a small economic difficulty or sickness could threaten your ability to pay off your mortgage.

An even in the unlikely situation were you would be able to successfully pay off your new mortgage without any economic downturn, living house poor would inevitably lead you to sacrifice many life comforts. 

You would have a hard time saving money for retirement, you might have to cancel vacations, etc. Getting those comforts back would require you to find a way to significantly increase your household income.

A good rule of thumb is the 28/36 rule, a rule often used by mortgage lenders and creditors to gauge their borrower’s debt repayment capacity. This rule states that a household should spend a maximum of 28% of its gross monthly income on total housing expenses, and no more than 36% on total debt repayments.

For example, if your household monthly income is $6,000, your household expenses (including your mortgage) should not exceed $1,680, and you total debt repayment (including credit cards, student loans, car loans, etc.) should not exceed $2,160.

In fact, mortgage lenders and other creditors often use this rule to gauge their borrower’s debt repayment capacity.

Understanding your Budget

There are really two key factors to consider when creating a budget as a homeowner:

How much do you expect to sell your home for?

You can use our instant home evaluation tool by clicking here or scrolling down below. figuring out what your home is worth is crucial to understanding your financial ability. Once you figure out how much you believe you can sell your house for, you will need to factor in any outstanding mortgage balances you may still owe, and after you do you will have an idea for how much cash you will be bringing to your next purchase.

How much mortgage can you afford?

Once you have a rough idea for the amount of money you will be netting from the sale of your home, you can use that to figure out the budget for your next purchase. If you subtract the amount of cash you netted from the list price of the home you want to buy, you will have the amount of money that you need to loan in order to finance the purchase. For instance, if you have $400K from your home sale and you want to purchase a $1M home, you will need to apply for a new mortgage in the amount of $600K to afford the home. After you know how much you need to borrow, you can click here to use our mortgage calculator to find the right price that fits your monthly budget.

Whats your Home Worth?

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Should you buy your new home first, or sell your old home first?

You may have already found your dream home, and fell in love with it. You may be inclined to buy that home before you sell yours. Typically, it’s better to sell your old home before you buy a new one. By doing so, you’ll have the funds from your sale already, you’ll be able to make a larger downpayment on your mortgage, and you’ll avoid spending time with two mortgages at the same time.

If you absolutely must buy a home before you sell yours, you should at the very least do the following:

  1. Work with your real estate agent to get a market analysis of what you can expect your old home to sell for (do a conservative estimate to be safe). Study the current market, and see how long it takes on average to sell homes comparable to yours. 
  2. Set up a clause that lets you list the day after your offer’s conditions on your offer are waived.
  3. Get a 90 day closing, so that you have enough time to sell your home.
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The Market-Ready Checklist

Follow our checklist below to make sure that your home is ready for showings and always displaying at its best!

1

Clean the entire house from top to bottom

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Declutter every room and get rid of anything you don't need

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3

Clean out the garage

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4

Repair any damage to the walls, floors, or ceilings

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5

Make sure all of your appliances are in good working order

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6

Update the feel of your home with a fresh coat of paint

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Consider Pre-MLS Marketing

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Be prepared to take action

At this point, you should be getting ready to list your old home, and you also have a pretty good idea of the type of home you WANT to purchase and CAN purchase. 

As mentioned earlier, the best case scenario is that you’re able to get your home purchase to coincide with your home sale. This is especially important when you want to use your home sale earnings to purchase your new home, or use them to make a substantial down payment. 

Of course, getting the timing right can be tricky. There are many issues to be aware of, such as:

What kind of market are you in?

If you’re in a seller’s market, there will be more buyers than homes for sale, and selling your home would be fairly easy and quick. 

At the same time, that would mean a lot more competition when buying a home. You could easily lose to another buyer, or you would need to offer more money and fewer contingencies to get your next home.

Contingent Offers

Writing a contingent offer means that the purchase is contingent upon you selling your old home. In essence, this would protect you in case the sale falls through for whatever reason. And while this would seem like a good way to protect your own interests, said clause could actually keep a home seller from accepting your offer.

There are two types of contingent offers. One where your home is currently listed, but you don’t have a buyer yet, the market. The second one is when you do do have a buyer lined up, and the transaction is already in escrow, just waiting to be close. 

As you can imagine, the second one will be more attractive to the home seller, since it has a high percentage of success.

So if you’re trying to purchase a home in a strong seller’s market, your best bet is to submit a non-contingent offer, or find a way to make a more competitive offer (usually by raising your offer’s dollar amount) in order to have a greater chance of having your offer accepted.

Funds transfer

It’s very tricky to negotiate two closes in parallel. Though its possible to have a simultaneous close, you do need to have all dates aligned, and use the same escrow company for both transactions for the process to work.. 

Temporary housing

In case you do end up selling your home before you buy a new one, you have to consider where you would live in the meantime. Would you get short-term rental, stay with friends or family, stay at a hotel, or negotiating a rent-back with your home buyer?

And what about your possessions? Are you going to keep them in a storage facility, or at a friend’s home? Or would negotiate with your moving company so it can store your items for some time?

In Conclusion

Upsizing can be a very exciting process. But it also needs to be approached with caution, and with plenty of knowledge about what to expect. Be sure to consult a trusted real estate agent that can guide you through the entire process as smoothly as possible.