Why Your First Home Might Not Be Your Dream Home

I often find that many first-time home buyers begin their search thinking they will find their dream home, but your first home may not be your dream home at all and I’m here to tell you that’s ok. You need to think of purchasing your first home as a step on what may be a long path toward the home of your dreams. It is by far the most important and crucial step, it requires guidance and local knowledge.

When I initially meet with first-time home buyers some of the first things I ask is what does your ideal home look like? What are the features you can’t live without? What are you looking for in a location? And what is important to you about the property itself? These are critical questions that will not only help me to refine the search but also help me to manage expectations. By applying my expertise in the local market I can help set realistic goals for my clients. 

The Houses in Your Area & Budget Might Not Check All the Boxes

The real estate market in the greater Portland area is still highly competitive. Many of my Clients soon realize that they may not be able to check all the boxes for their perfect house. The quicker we can set realistic goals, the smoother and more productive the search will become. We can start to refine the checklist. What are the absolute must-haves and what are some things you can compromise on? There may be properties that you can make some adjustments to that will make the house work for you. The key is to find a home that can check as many of the boxes as possible. And again, remember, it doesn’t have to be permanent.

You Likely Won’t Live There Forever

Take into consideration the timeframe you would be willing to remain in your first home. I suggest that my clients have an equity check after they have owned the home for two years. After a homeowner has lived in a home for two years as their primary residence they do not have to pay capital gains taxes on the sale if the proceeds are less than $250,000 as a single person or $500,000 as a married couple. If you sell at any point prior to that two-year mark or if you utilize the property as a rental instead of a primary dwelling you will pay capital gains on the proceeds from your sale. This is an important factor to take into consideration because the fewer taxes you pay on your sale, the more equity you have gained, which ultimately increases your purchasing power for your next home. 

You Will Have the Opportunity To Use Your First Home to Purchase Another Property Later

After you’ve completed an equity check you then have the information you need to know if you are in a position to sell your first home and have the proceeds necessary to use as a down payment towards that dream home. Chances are you will have to sell your first home to make that next move, but you will definitely want to discuss your options with a lender. You may have to make an offer on another property contingent on the sale of your own or there could be a possibility that you can make an offer on another property and then sell your first home. When making a sale and a purchase at the same time it is vital to have a team working together to ensure that you’re positioned appropriately in the market. 

Recognize It Isn’t Always As Straightforward as It Seems

Getting into your dream home is not always a linear move, there are often roadblocks and detours along the way. It is possible to get there, but sometimes it requires flexibility and creativity. If you are looking for a Portland Maine based real estate agent to help along the way, let’s connect. Click here to get in touch with me directly! I would love to be a part of your journey to your dream home.