Moving to a larger home? Fatal mistakes to avoid!
2015/10/01

"Moving to a larger home is both an exciting prospect, and, for many South Africans, also a near panic inducing one. "

Unlike the first house you bought (usually without much collateral for the bank loan), you now own (or partly own) at least one large asset, meaning that the loan for the next house you purchase could be substantially larger than your first home. This is a good thing, right? Well, not always.

As you will see in this report, there are many factors could complicate your life. The good news is that they are all manageable if you know about them. Below are tips derived from the most common mistakes that South Africans make when buying a larger home.

Timing is everything.

The old saying "timing is everything" is exceptionally pertinent to you, if you are considering a move to a larger house. Most people hear the statement, but still do not truly understand the implications surrounding it. As with the first time purchase of a home, your temptation is to rush out and put an offer to purchase on the first home you like.

There are several problems with this hit-and-miss strategy:

1. Not all houses advertise the fact that they are for sale on boards outside the house. So, you will never know if the house next door to the one you see is also for sale, unless you ask. This problem can be gotten around by asking your local real estate agent to assist you in looking for a property. Most proficient real estate agents have long lists of properties that are on sale in the neighbourhood and can help you to avoid the disappointment of discovering that a house that you like has already been sold, or exceeds your new budget.

2. Should you manage to find your dream house, and find that it is within your price range, you may soon encounter another major issue. If you are not prepared, you will then have to start the process of selling your current house. This sale now becomes extremely urgent as you want to purchase the new property before it goes off market, and this may drive down the sale price of your existing house. Either that, or you may have to pay a double bond for a few months while your current house sells, a very costly mistake to make. To avoid this nightmare, ensure that you work closely with your agent!

3. If you are in a rush to move, you may also find that it is more difficult to make those small improvements to your existing house that may drive the sale price higher. These fixes and repairs don't have to be expansive, but, for the most part, they require time and attention if you want to avoid the expense and increase the sale price of your home. In essence, you should take the time to do things properly. BUT this doesn't mean that you have to take months and months to do things!

Before you start looking for you new home:

1. Have your current home evaluated by an experienced professional. Your local area specialist real estate agent will probably offer you a free evaluation. You can also learn from your agent what the approximate sale time lines will be, so that you can plan your next purchase.

2. Chat to your financial institute about what loan you qualify for. It is better to gain a clear understanding of your financial situation than to find your dream home only to be disappointed because the bank will not approve a loan for it!

3. Determine if the current real estate market is a "sellers" market or a "buyers" market. What part of the cycle the industry is in will dramatically affect both sale price and purchase prices, and will assist you in developing your "upgrading" strategy.

4. Get the home ready to sell. This involves fixing those small things that can be easily fixed that could, if not repaired, lower the sale price of your home.

5. If you choose to use a real estate agency, ensure that you choose one that you feel comfortable with. This comfort should not just be the warm, fluffy feeling you get when the estate agent talks about your profits from the sale. It should be based on the agent demonstrating extensive knowledge of both the real estate industry in general, and the area in which your home is for sale (area specialist).

6. Ensure that the estate agent assisting you is able to give you specific marketing strategies that they will follow to sell your home, so that you can better time the purchase of your next home.

The Purchase

1. This is the fun part of the whole process - make sure you enjoy it!

2. Ensure that you understand terms like "occupation on transfer" or "occupational rent" that may be included in your offer to purchase. Your estate agent should be able to offer assistance with this.

3. Ensure that you time the sale of your existing house with the purchase of your new one.

While sometimes not possible, it is much easier to use the same real estate agency to both sell your current house and purchase your new one.

Realty King IPG

RTS 10/15