You know what your home is worth … now what?

So the journey continues.  You’ve decided to make a move.  You’ve had a few agents in with their opinions on the value of your property.   So what next? 

The transition of selling and buying a property is definitely not as easy as it seems.  Unlike a first time buyer where there’s nothing to sell and/or little pressure to get a specific closing date on the purchase, when you have to sell one property to make the move to a new one, it can be riddled with challenges.  The key is to understand what those challenges are and manage them accordingly.  THAT’s where a good agent can make ALL the difference.   So my friends, BEFORE you sign on the proverbial dotted line, make sure you understand the PROCESS and philosophy your agent has.   ***Dirty Little Secret Alert*** some agents could care less about sharing their process with you – Smoke and Mirrors - Selling your home is all they are looking at.  Sounds right, huh?  Maybe not – the end doesn’t always justify the means. 

Essentially, there’s two ways you can make a move

1)      Sell First, Buy second

2)      Buy First, Sell Second

Seems pretty straight forward.  If you question your agent which way they think YOU should go, listen                                                                       carefully.  Does it make sense?  Or is it “realtor-babble”?  Because far too often, the process or plan is never really articulated ***Dirty Little Secret Alert***  They have no plan.

Sell First, Buy Second

So let me paint this first scenario for you …… You’ve figured out the price (after a whole bunch of time talking pricing strategy – that’s a different segment). You’ve got the sign on the lawn and you are open for offers.  Lo and Behold you HAVE one!  Yippeee!    You sell your home for a price that makes you happy.  Again, Yipppeeee!!!   Now it’s time to find the next house….. so out you go in the car with the agent to search for that dream home.  Buuuuuuut, and yes, there IS a but ….. you can’t seem to find what you were hoping for!    You’ve just become the Agent’s next victim.  Yes, I said, VICTIM.  What he failed to tell you was that the 5 bedroom, 4 bath home that you THOUGHT you could afford…. Is beyond your price range OR rarely comes up on the market.   You thought your dream home was in the $900K range, but it’s really at the $1.5 mill range….. Feeling a bit sick? Wouldn’t you have liked to know that BEFORE you sold your home?  Thought so …..  but here’s the big kicker… now you HAVE to buy something.  You’re far more likely to settle or feel pressure to make a purchase you may not feel all that excited about.   And better yet?  The Agent got paid…. Twice.   Whether you love the new house or not… they got paid. 

Buy First, Sell Second

The second scenario has you buying your dream home first.  You based your range on what the agent “thinks” you’ll get on the sale of your current home – which was a “feel good” number – and you’re now faced with taking less (and in some cases MUCH less) than you anticipated. How many times have you heard someone say “My Agent said I have to drop the price, the market has changed”.  Well, now, no matter what, you have to sell – or be the owner of two homes. Bet that “feel good” number doesn’t feel so good now, huh?  The thrill of buying a new home doesn’t seem so thrilling anymore. ***Dirty Little Secret Alert***  Although there are specific reasons why your home’s price was affected by the market, a total market shift is unlikely.  And THAT is one of the conversation points on the pitfall side that Agents never address or give a potential seller the opportunity to understand. But by and large,  “the market changed” is a load of “bull cookies”.  An agent knows that you’ve invested your emotion into the new house and knows that the “price reduction” conversation will be met with little push back… you have to sell… and he knows it.  And let’s face it, no one drops the price if they don’t have to.

These are the classic scenarios you see all the time.  An agent that doesn’t fully explain the process or the pitfalls.   Buying first has its pitfalls and Selling first has its pitfalls.  But if you don’t know those pitfalls how can you make a decision that is best for you?   ***Dirty little secret alert*** Many agents don’t know the pitfalls themselves and can’t guide you through any potential minefields.   

So which one is better?  It depends.  It depends on YOUR situation and YOUR comfort level.  And that’s my point.  An experience, professional Agent can anticipate scenarios that sellers/buyers don’t.  Our job is to ensure that you have ALL the education and information to make an informed decision for your particular circumstance.  A good Agent can save you time, money and heartache …. a not so good Agent can bring you nothing BUT heartache …. And cost you thousands in the end.    I know I’ve saved some clients from themselves --- it’s a pretty emotional thing to buy a house and we are here to guide, counsel and advise.  Not MAKE the decisions, but help clients make INFORMED decisions.  You’ll never completely eliminate risk in any endeavour, but you can certainly minimize it … a good agent does just that.

So without any further ado, in my humble opinion this is the process I follow to ensure my client’s success:

1)       Based on the potential sale price of your home (assuming you didn’t fall for the “feel good” price”), take it to you mortgage broker or bank and see, based on your current financial situation, at what price range you can comfortably afford.

So now you have a range of purchase price and you KNOW what the monthly payment can look like.  Excellent, but that’s not where the information gathering ends.

2)      BEFORE you even consider which direction to go – Buy First or Sell First, get out window shopping – WITH your Agent.  Yes, browsing for homes – with NO intention of purchasing (did you hear every part time agent gasp????)   Many agents skip this step – it’s not a revenue generating exercise (PS, they think it’s a waste of their time).   Yet, THIS is where you decide HOW you want to make the transition or whether to make the move at all!  Did you see a lot of homes that you would have considered buying?  Does what you want to purchase exist in the marketplace in abundance?  Are you looking for a specific street/style of home that isn’t available often?  Can you afford the neighbourhoods you like?   These are some of the hot button reasons on whether you choose to sell first or buy first – without that info, you are relying on Lady Luck to align your stars.       

My point is  ….after you and your agent have completed the Orientation, I guarantee you will have one of two reactions –

“Wow, I saw some great stuff out there”  

Or

“Holy sh*t, I’m not living in any of those!”

So then you are equipped to make the decision of sell first, buy first or  …. Wait for it ….  every agent’s nightmare….  Do nothing at all.  Yes, NOT MOVE!!!!  I know!!  You’ve just passed out….an Agent that is supportive of a decision not to move.  But a decision based on information.  From everyone’s perspective, isn’t it better to figure out you CAN’T or don’t WANT to move based on real facts?   I’ve often had clients that make that very decision and then resurface in a year or two when the information or circumstances have changed.  It’s not about my timing, it’s about theirs. 

So when speaking with your potential Agent, ask them how they work.  They should be able to provide you with information on how and why they would suggest you buy first or sell first (or stay put). THOSE are the professionals that don’t NEED your business, but they WANT your business.  If your agent can’t articulate what their process is (and it makes logical sense), or doesn’t see the need to explain it (the classic, “don’t worry” we’ll look after everything make me completely worry!) or hasn’t demonstrated  an understanding of the potential pitfalls (and have a plan that anticipates them), then maybe you take a pass on that agent.  Lord knows, there’s 55,000 Realtors in Toronto …. But less than 10% make a living at it.  Make sure you find the one that can safely steer you to the shore not look at you like you’re their next meal! 

Until next week when we talk about Full Time vs Part Time Agents and why you should care.