Most people at some point in life reach an age when all their extra belongings become more of a burden than create enjoyment. At this point downsize plans are in order. In many cases the cost of yard maintenance and utility expenses to accommodate a larger home can be daunting. When on a fixed or semi-retirement income it can be even more challenging. One of the biggest mistakes made is the failure to plan ahead to downsize. Downsizing does take quite a bit of time to accomplish. Another ideal plan that is overlooked is to sell and buy a home simultaneously to save money and time. Often times empty nesters wait too long before downsizing and thier health begins to fail them limiting their enjoyment of life even after downsizing. So when and how should you plan to downsize for best results?
When to downsize varies from person to person, but if your children are out of the house and have completed thier college education most likely it is a good time to begin planning ahead. A good place to start is realistically determining what your retirement income may look like based on your social security statements, investment savings, and pension plans. If you have any large debts that are outstanding, attempt to pay them off. Try to get balances to no more than 1/3 of the credit limit or original loan amount if you can’t pay them off. Doing so will better prepare you to have little to no overhead once switching over to a lower monthly income. If balances are left that are smaller it will make it easier to apply for a home equity loan at much lower interest rates. Loans using equity often significantly lower monthly cost should you get in a financial bind.
Once the preliminary financial items are in order, it is a good time to get with a real estate agent to get an idea of what your current home may be worth. Depending on if your mortgage is paid in full or you have a reasonably low balance you may have enough profit to pay for a smaller home in full or nearly pay it off up front. It is always better to reinvest in a home that can be paid in full. If the funds you have aren’t enough to do so, put as much as possible into your equity to decrease your monthly note to the lowest possible. Have your agent begin to search for potential homes in areas you wish to live in based on the minimum square footage, number of bedrooms and bathrooms, as well as lot size for what you can handle on a lowered income. Avoid the mistake of purchasing homes that are not single level to accommodate potential health issues that would prevent upstairs usability as you age. Consider Condominium communities that are established with lower monthly maintenance and grounds keeping dues.
You should at the same time be discussing with your agent the sale of your current home. Contact your children and relatives to see if any of the items you wish to let go of is of interest to them. Then consider liquidating any other items by way of an estate or garage sales. If you don’t like the stress of garage sales there are apps that can be used on smart phones such as “let go”, “offer up”, “5miles”, “craigslist”, and a host of others. The last step is to consider donating any remaining items to non-profit organizations that issue tax deductible statements for donations. Don’t like any of these options? Most real estate agents have a network of folks in the industry they frequently utilize to assist thier clients with reputable estate auctions. These services basically do everything for you and get you as much as possible for all your belongings. Usually this includes getting the items delivered, packaged and shipped to buyers, or bulk packaged to liquidators that buy items. After all is done they usually charge a percentage fee of the total of the sale of your items for the work done. On average you can expect them to charge a fee of 25% to 40% of the earnings depending on the package of services you select.
Now that you have cleaned out all unneeded items you should be able to talk with your real estate agent on preparing to place your home on the market. One of the things requested most is fresh paint throughout the house. If flooring is worn consider replacing rooms that are less than appealing. Should your flooring be in good shape, then consider shampooing carpet and polishing all other floor surfaces. Unable to afford more modern vanity and sink combinations in your bathrooms? You could consider painting cabinets white and adding newer knobs and sink if possible. The same applies to the kitchen. Keep in mind that different features sell differently from one community to the next so ask your agent about the sales trends and what buyers are seeking in your area the most.
Your agent should be able to coordinate both the sale of your home and the purchase of a new home if you give them ample notice of your downsizing plans. Many times downsizing can be costly because the empty nester does two transactions but at different times. This creates the need to move home contents twice! Extra work and extra cost. In many cases depending on your agents network of closing attorneys, they may be able to recommend one that will give a discount on thier fees if you give them the business of two closings at once!
After your careful planning in advance to accomplish a smooth downsize move, you can now enjoy your rewards! No more cutting large lawns and garden care, leaving more time to sit out on the patio! More opportunities to travel with funds freed up from lowering your cost of living! In some cases if your plans included paying off your home in full, the joy of being mortgage free! Still not sure where to start or what to do? Give me a call today and we can sit for a free consult to get you on your way to planning for a downsize move in the future!
Your Preferred Real Estate Agent — Julien Lafont