Are You Ready to Upsize Your Home?

By Scott Moore, Realtor

Everything in life has a season, including starter homes. By definition, a “starter home” is exactly that—your first home.

Starter homes are some of the easiest purchases we handle in real estate—buyers know it won’t be forever, their expectations are lower coming out of a parents’ home or a rental, and they usually aren’t committed to a specific area so they have lots of choices.

Fast forward a handful of years, add a marriage and maybe a kid or two, possibly a couple of pets or a career change, and suddenly that starter home isn’t working as well as it used to. One of the most common calls we get is from people wondering if they can afford to upsize. When you have one of our realtors over to help you with that conversation, here’s what that meeting will look like.

How do you know if you can afford a bigger house?

First, we go over the practical reasons why it might be time to move up, such as more bedrooms, proximity to work and school, a larger backyard, a dedicated home office to allow for work-from-home, etc. Next, we talk about some of the lifestyle reasons you might be wanting to move—the ability to host friends on a more spacious deck, room for a home gym, need for a homework space for the kids, or a larger or more functional kitchen. Usually by the time you’ve arranged to have a realtor over, people are clear about the items on these lists!

After we get a read on what you’re looking for, its time to discuss two big numbers: an estimate of what it’s going to cost to get you the type of house you’re thinking of, and a fair estimate of the value of your current house. Once we establish those two ranges, if it’s still seeming like a good plan, then the next step is to meet with a mortgage broker to get a pre-approval to firm up the financial part of the plan, and get ready to start making a move.

Should I sell before I buy, or buy before I sell?

There’s no one-size-fits-all answer to this question. Buying a home when you already own a home means juggling your specific circumstances but coordinating this process to ensure a seamless transition is one of our specialties. Figuring out what will be best for you is the Part 2 to the discussions you have with your realtor about the process of upsizing.

Most people usually buy before they sell because they want to be sure that they have secured a home they love before letting the current home go. This means taking some risks as you won’t know the exact sale price or possession date for your current home before committing to the purchase, however many people are comfortable with this, particularly when they have an experienced and knowledgeable realtor on side.

However, there are also lots of good reasons why people decide to sell the current home first. Sometimes its circumstances—either they get a good offer for the home, or they want to take advantage of current market conditions. Sometimes it’s because they want to know how much the current home will sell for to budget for the purchase. When we sell the home first, we are usually shooting for a longer possession date (in the 90+ day range) to allow for as much time to find a new home and allow for conditions to be satisfied and the vendors to move out, so we can line up the possession dates.

What is the best way to line up the possession on my new and my old home?

It’s really important to get this right! Watch for mistakes like giving up possession of the current house at 9am on the 1st and getting possession of the new house at 9am on the 1st —sounds right to a rookie but that won’t work! You need time to get your belongings moved out and to clean the home before giving up possession. Doing all that by nine in the morning is next to impossible.

Most people like to take possession of the new home a day or two ahead of giving up possession on the old home—this gives time to move out and clean up, while making sure you have a location to move your belongings into to avoid paying storage fees to a moving company.

For example, if you take possession of the new house on Monday at 9am, the movers show up and move out from 10-1pm, then unload from 2-5pm at the new house. You unpack, order pizza and collapse. The next day, you go back to the old house to clean, take your meter readings, and say goodbye, and the new owners take possession at 9AM the following day.

Likewise, if you’re planning to do some quick renovations to the new home (paint, or new carpet) you may want possession of the new home a week or two ahead of time to allow you to get that work done before moving in.

Delaying possession of the old home may require bridge financing as you will own the new home before you have the proceeds of the sale of the old home. Part of your financial pre-approval is figuring out what options you have for bridge financing.

What happens if the possession dates on my purchase and sale don’t line up?

Again, this is really where you need a sharp and experienced realtor. If you have already purchased a home with an established possession date, your realtor should make it known to prospective buyers what possession date you are looking for. You will also want to have a clear idea about your options for bridge financing if you can’t get it to line up perfectly.

When an offer (or multiple offers) come in, the possession date is a key term that cannot be overlooked—and may require some negotiation. If the potential buyers are not able to work with your preferred possession date, then your realtor will go back to the vendors of the home you bought and see if there is room for negotiation there instead.

As you can see, there are so many dynamics to buying a home when you already own a home.

If you’re thinking about upsizing your home in Winnipeg, please give me a call at 204.995.7355 — I would be happy to help.