When the last time you bought a home was far enough back that your mortgage is paid off, or nearly so, can we give you some advice? A lot has changed in the real estate industry since the 1980s, in both the selling and buying process.
First, you’re no longer looking for areas with good schools for the kids or a strong job market for you and your spouse. So, your priorities have changed as well and you have far more freedom now to live where you want and how you want.
It’s liberating, isn’t it?
If you’re considering downsizing your Woodland Hills, Calabasas or West Hills home, read on.
Right now, half of the “most viewed” articles on AARP’s website deal with romance, sex and vacations. Retirees — or those contemplating retirement — don’t have a one-track mind though.
When they aren’t reading about vacations, they think about their finances. And downsizing a home isn’t just a way to save on home maintenance costs but also a way to free up all that equity you’ve built up to use during your retirement.
Whether you’ll be shopping for another, albeit smaller, single-family house or a condo, downsizing doesn’t really differ that much between the two. Since it’s a major life event, however, it’s a bit scary, “like having an empty nest after the children leave,” says gerontologist Karen Owen-Lee.
Be that as it may, baby boomers are a hardy bunch and it takes a lot to frighten them off what they truly want. In fact, of the 14 percent of Americans age 65 and older who say they plan on moving in the next five years, 67 percent say their priority is to move to a smaller home.
My best advice to you is to first consult with your accountant or financial adviser before taking any concrete steps toward that new future. Armed with this good advice you’re in a far better position to make this move, sans the emotions.
Unless you are moving out of the area it is probably best to look for a new home and start to prepare the current one for sale rather than actually listing the current one. It’s a tricky process but I’m happy to walk you through it.
Consider the advantages and disadvantages
If your home is paid off, you’re in a far better financial position than many retirees but you should still consider the costs of selling a home. You’ll pay real estate fees, title and escrow fees and transfer taxes. These can add up. I am happy to provide an estimate.
The advantages to downsizing, however, may just offset those costs
First, if you don’t pay cash for the new home, you’ll have a mortgage payment or you can consider a reverse mortgage. Since you’ll be buying a smaller home, however, your payments may be far lower than they were when you had a mortgage on the current home.
And, because the home will be smaller, you’ll save money on utility bills and, if you choose a condo, home maintenance chores may be picked up by the HOA.
It is also important to pick a home that will be easier to navigate for years to come. Too many levels or stairs may be a challenge in the future.
But, before you can make a plan for the future, you’ll need to consider both sides of the issue, the good and the bad.
Yes, there are disadvantages
In a perfect universe there would be perfect timing in all that we do. Selling your current home would coincide with a hot sellers’ market which would magically morph into an equally fiery buyers’ market when you look for the new home. Much depends on where you would like to move.
Ah, that dratted universe – nothing is perfect
And, the late Steven Hawking agrees. “One of the basic rules of the universe is that nothing is perfect. Perfection simply doesn’t exist … without imperfection, neither you nor I would exist,”
The upside to this, however, is that one of the markets will prevail so you are ensured of saving money on at least one of your transactions.
Next, consider that condo living offers many advantages (low maintenance, amenities you might not find in a single family home) but it has drawbacks as well. Chief among these are the HOA fees and any special assessments which may crop up in the future.
It’ll work with a good plan
My advice is to plan your transition as soon as possible. We are still in one of the best sellers’ markets we’ve seen in decades and interest rates are amazing low but we don’t know for how long.
To make the most money possible on the sale of your current home, get it on the market soon
Once you have a good overview of your finances you will know how much to budget for a new home or condo or a senior community.
When considering downsizing, it’s important to consider not only the type of neighborhood and home in which you want to live, but the financial aspects of the move as well.
Again, I can’t stress enough how important it is for you to seek counsel from your financial planner or accountant to set budgets before making any decisions. Then, call me and we’ll get started on the real estate part of your plan.
For a free consultaion about selling your family home in Woodland Hills, Calabasas or West Hills CA please call (818)570-1144 email [email protected] or watch my videos on
I help Real Estate Clients who need a little more attention – Seniors, Probate and Divorce