The Ultimate Guide for Home Upgraders
Are you ready to upgrade your first home? Did you buy knowing it wasn’t your forever home and now you’re ready to find your dream home? We have the ultimate guide for home upgraders like you, whether your family is outgrowing your house, whether you bought an apartment first and now it’s time to find a bigger home or whether renovating your current home is just not your thing.
Selling your first home and making the move into your next one can feel overwhelming. Let us walk you through the steps you need for a stress-free experience.
Step 1: Make a budget and determine your family’s needs
First thing is a budget! And next is evaluating what is most important to your family. There are a few important parts to this planning stage:
Know how much your home will sell for
Having a good real estate agent will get you off to a great start. They will do a market analysis and give you an estimate of what your house will sell for, based on similar sales nearby. You can also do this yourself through websites like realestate.com to track nearby sales of properties like yours.
Once you have this estimation, you will need to take into consideration costs associated with selling your home including real estate agent commission and fees, conveyancer/solicitor fees, lender fees (mortgage discharge fees) and the expense of preparing your home for sale. Your profit from selling will be your sale price minus these costs.
Set a budget for your new home
Ensure you give yourself a buffer in your budget for purchasing your new home. Unforeseen expenses can arise in your selling of one property, and buying of another, could have you in trouble needing to come up with cash you haven’t budgeted for yet.
Improve your credit score
Before buying your next home, you should improve your credit score as much as possible. However, the good news is that you don’t necessarily need a perfect score to get a mortgage. In Australia, a credit score above 700 is considered “pretty good”, while anything higher than 800 is “excellent”. You can check your credit score for free in Australia every three months. [Suggestion: link to https://moneysmart.gov.au/managing-debt/credit-scores-and-credit-reports for information on accessing credit score in Aus.]
Get (or keep) your credit score in great shape
If you already have an excellent credit score, you want to keep it as stable as possible while you are going through the mortgage approval process. A good tip is, if you are planning to buy a new home in the next few months, don’t take out any new loans, like a credit card or car loan. Taking on more debt can affect your debt-to-income ratio and can cause a dip in your credit score.
Another tip is to keep your credit balances below 30%. Check with your credit card company to find out what date they report credit. It may not be the same day your payment is due, so knowing the actual date can make sure your credit card balance shows your responsible use of the card.
Apply for a conditional approval
A conditional approval will set you apart as a serious buyer and get your home loan approved quicker when you need it. A conditional approval should generally come to you in writing, with all the conditions clearly listed.
These conditions will depend on your circumstances. They could include a requirement to sell another property, pay off an existing debt, provide more documentation or close a certain account.
Importantly, conditional approval is not a guarantee that you will qualify for a home loan, but it can be an important step in the process.
As this is only Step 1, your planning stage, now is a good time to collate all your financial documents and have them organised, either digitally or in a filing system at home, ready for the mortgage approval process.
Make a wish list
When you make the decision to upgrade, you have the advantage of making your wishlist of things your first home does not have. Owning your first home and living in it is a great way to learn what you love, don’t love and want in your next house. Want a big walk-in closet and a big backyard? Will you now need a home office for work from home requirements and still need enough bedrooms for the kids? Make a wish list of features you love and this is your chance to look for them in your next home.
Put it on the wish list!
Consider school catchment areas
For many families, school catchments for public school or proximity to private schools are of prime importance. Your real estate agent will have a good idea of what neighborhoods feed into great schools.
If you’re looking to do some research on your own, though, here are a few questions to ask yourself in the process:
- What’s the teacher-to-student ratio?
- What are graduation rates and how do they compare across the country?
- What extracurriculars are offered?
Even if you don’t have school-age kids, buying in a good school district is a good idea because it will help with your home’s resale value in the future.
Step 2: Sell your home
Now that you have an idea what your dream home looks like, it’s time to get your starter home on the market and begin preparing for your move.
Your first home has been working hard for you to build equity and increase in value so that you can take this next step, so read on how to take advantage of this opportunity.
Build your dream team
Now it’s time to find a great real estate agent. If you’ve already built a relationship with someone you trust, great! If not, take your time to find a real estate agent that has your best interests in mind.
It’s best to go with an agent who is familiar with your neighborhood. Buying any home, whether it’s your first, or fifth, will likely be one of the biggest financial decisions of your life, so it’s good to be prudent in your search for a real estate agent.
Our top tips for finding a good one is asking them how many other sellers they’re working with currently to gauge how much time and effort they will be able to give you to sell your home quickly and for the best price. Also ask them for references for your own research.
Up your street appeal
We cannot say enough how much first impressions matter for buyers. Before you put that “For Sale” sign up ensure your street appeal is as good as it can be.
Some simple steps can be things like updating, or simply polishing, your door handle, or giving your front entryway a fresh coat of paint or adding some potted flowers.
Decide when your home will hit the market
There’s really no wrong time of year to sell your home, especially in the current market. Talk to agents about what is happening in your area and they will be able to advise about potential upcoming competition. Ultimately, choose the timeline that works best for you for getting your home ready and in a position to purchase your next one.
Declutter and get a storage unit
Did you know staging your home could help you sell your home for more money? Professional stagers make sure your home feels inviting, but not too personalised. This allows buyers to love your home but also imagine their own belongings filling the space.
Before that happens, it’s a good idea to declutter and “de-personalise” your home. You can get a storage unit to store your things for your move or you can do a big declutter and sell or donate household items as you prepare your home for sale.
Step 3: Buy your new home
Here comes the fun part! It’s time to find your dream home and start writing the next chapter of your story. Here are some steps to take to help:
Give your real estate agent your wish list you have compiled and start narrowing down neighborhoods that interest you.
Remember, clever staging can affect home prices. So just as we advise you to stage your home for best appeal, be mindful of looking at homes for sale with the same treatment to excite you. While a professionally staged home can inspire you, you should imagine the home without the fancy furniture and decor and make sure any offer you make reflects its true worth.
On the other hand, if there are cosmetic issues you don’t like — say a paint colour you wouldn’t have chosen — remember that those are easy fixes. Ask yourself whether the home will fit your lifestyle, has enough space and if it’s in a location you like.
Put in offers
When you’re putting in offers, and doing so in a competitive market, you don’t want to go too low. In fact, low balling an offer might even offend the seller. Generally, 90% of the asking price would be considered a low offer.
You may have some flexibility to go with a low offer if the house has been on the market for a few months. You’ll want to rely on your agent’s expertise as they can run the numbers on what similar homes have been selling for nearby.
Ensure you get building and pest inspections
A solid home inspection offers insurance against any expensive surprises that could come up. If a building inspection report shows any serious flaws, and you have an inspection contingency, then you may be able to walk away from the deal with no penalties. Similarly, if your pest inspection shows any evidence of untreated termites or other pest evidence then you will have grounds to halt the deal.
These inspections also allow you to ask the seller to make certain repairs and fixes before you move in. A building inspector can determine if any cracks in walls are cosmetic or indicative of a structural problem.
Be at the property while the inspections are taking place and you can ask questions or point out anything you’ve noticed that you want to make sure are okay to proceed with the sale.
Get to the closing table
Congratulations, you’ve secured the house offer and are heading towards settlement! During this process, you’ll want to get your contingencies finalised. Property settlement periods are usually 30 to 90 days, but they can be longer or shorter if both parties agree.
Contingencies are clauses in real estate contracts where conditions need to be met, like unconditional approval or a home appraisal, before the sale can be completed.
Other common steps at this point include organising:
- All the money needed to complete the sale (to cover stamp duty, lenders mortgage insurance and other fees and charges)
- Building and contents insurance effective from the purchase date
- fFinal inspection of the property.
Make your move
Moving day! If you hire licensed professional movers, you should try to book the movers as far in advance as possible, especially at peak times of year.
For your actual packing efforts, instead of buying boxes, you can take a green approach and collect boxes from local stores that would be throwing them out anyway, or using existing household items like your suitcases, coolers, and washing baskets. You can also use towels and bedding with some items instead of buying bubble wrap.
Our last tip is to redirect your mail with Australia Post for a period of time. This gives you a stress-free approach to changing your address with any business that has your postal address. There are the big ones like your licence, utilities and bank, but all those things you get in the mail like subscriptions or birthday vouchers at your favourite restaurants you might forget about can be changed as you receive the redirected mail.
We hope this comprehensive guide to upgrading your home has given you the confidence to make your dreams come true for finding your next home. Call us to talk through your finance options to find out what you can borrow and get a headstart on your home upgrade.