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Avoid These Mistakes When Selling and Buying a New Home

Many people choose to sell their current home and shop for a new one at the same time. You may need to do this for several reasons, such as relocating for a job or making sure that your growing family has enough space. However, this practice can put you in a precarious position if you make a mistake. Learn about some common mistakes that people make when selling a home and buying one at the same time.

Underestimating the Costs of Selling

The cost of selling a home is usually 5% to 6% of the sale price. If your home's selling price is $300,000, your closing costs will likely be $15,000 to $18,000. This amount is deducted from the amount of money you get from the buyer's lender. You'll also have to pay some closing costs for the home you buy. You'll need cash for those costs. If you buy a new place before selling, you'll need to have plenty of cash reserves in your bank account.

Setting Too High of a Price

When people search for a home, they usually set an upper end to the price range. Their search filter won't show them houses that cost more than this amount. If you set a high price for your home, you could end up missing out on a lot of prospective buyers. Instead of setting your home's price at $305,000, a price of $299,999 will capture the people who set their upper price range at $300,000.

Accepting the Highest Offer

The highest offer might not be the best one. A high offer might be wrapped up in contingencies, such as the buyer getting approval from a lender or the appraisal coming in at that price. You might be better off taking the slightly lower cash offer. A cash offer could mean a faster closing and less hassle throughout the sale process.

Ignoring a Major Repair and Focusing on Aesthetics

Fixing a roof or foundation isn't fun. However, it's necessary. Buyers will run away from a house they anticipate will need major repairs. If you do get any offers, they will be lower than what you might have otherwise received if you made the necessary repairs to get your house in good condition. Instead of focusing on expensive cosmetic renovations or aesthetics, do the major repairs first.

Buying More House Than You Can Afford

If you're moving because you need more space, you could end up in a risky financial situation. Your new home could cost a lot more than your current one. If you don't sell your home right away, you might end up with two mortgage payments, two sets of bills, and two sets of property taxes. This might be more than your finances can bear. Make sure you can swing all of these payments, and be prepared in case it takes a few months to sell your old house.