So, you’ve made the decision to downsize your home. Congratulations – this is a big change to consider, and if you’re reading this article, it means you’re ready to make your next home purchase the best fit for your family! Whether you’re downsizing because of an empty nest, for retirement purposes, or simply to reinvest, The Caroline Mathes Team is ready to help make your next real estate move.
By now, you’ve probably started investigating how other people went about the downsizing process, meaning you’ve come across all the horror stories and “worst decision ever” articles. Don’t worry: downsizing might be the smartest real estate decision you make. However, there is some planning and forethought required before you make the switch to a smaller property – both real estate planning and lifestyle planning. Let’s discuss how to downsize without any regrets.
Lifestyle Decisions
Downsize earlier rather than later
One of the biggest reasons people regret downsizing is because they wait too long to do it. By the time they’ve decided to move somewhere with less space, they’re at an age where the moving process requires more energy than they have. Additionally, people who wait to downsize often wait until there’s a tragedy: a family illness, a market collapse, etc. As a result, their downsize becomes less of a lifestyle decision, and more of a response to tragedy, making the entire process draining for everyone. If you’ve decided that downsizing is right for your family, be proactive – start looking for properties now!
Spread the downsizing process out
Downsizing is the first of many decisions you have to make. Inevitably, you will have to sell furniture, put memories in storage, toss certain items, and potentially relocate to an entirely different community. All of these decisions take months to accomplish, so start working now – figure out which items in your household will stay, which ones will go, how you’ll get rid of certain things, and what kind of community is ideal for you.
Be aware of measurements
How many square feet is your house? Most people know the answer to that one, or at least have a good ballpark estimate. Now, how big is your bedroom? How much storage space does your bathroom have? How many shoes fit in your closet? If you move into a new property with too little space, or if you’re not prepared for a new sense of coziness, you might not enjoy the first few months of downsizing. Make sure you know the measurements of your current property and the properties you’re considering, and have a clear idea of how much space you’ll need for your essential amenities.
Focus on the benefits
In my experience, the #1 source of downsizing dissatisfaction is when downsizers focus on material possessions rather than the benefits of downsizing. These homeowners get stuck focusing on the memories that they’re tossing out or putting in storage, they lose sight of the benefits that come with downsizing: less space to maintain, proximity to loved ones, and the financial benefits of reinvesting.
Real Estate Decisions
Research thoroughly
With downsizing comes some extra flexibility when it comes to your budget, so you have more room to find a property that really fits your needs. These needs extend beyond just the home’s amenities and kitchen space – they also include the community your home is nearby. How close is the property to your family, to the city, to a coffee shop or church or library? Does the property sit in a walkable neighborhood? What about the neighborhood’s HOA requirements, demographics, access to public services, etc.? Ask yourself these questions and ascertain all of your needs and values before you’ve made your decision.
Focus on your needs
Downsizing requires a different mindset – needs over luxuries. That’s not to say a downsized property can’t have luxuries of its own, but downsizers often make the mistake of focusing on the walk-in closet, when they really wanted a kitchen with an island. Make a list of the essentials in your downsize – most often, these are bedroom- and kitchen-related – and don’t look at the bells and whistles before these needs are checked off.
Don’t let your current property create real estate baggage
Here’s a hard truth: home sellers are much more likely to avoid buyers with contingencies. If your purchase of a new home is contingent on selling the space you currently live in, then the real estate process moves a lot slower, and the home seller has no guarantee that you can close. If you can’t buy a new property without selling the old, consider selling your current house, placing your furniture in storage, renting for a few months, then transitioning to your downsized property once you’ve made the sale. That way, you don’t miss out on real estate opportunities because of unwanted contingencies.
Don’t assume that a mortgage is your worst option
Downsizers assume that, because the value of their current property exceeds the cost of their downsize, they won’t need to take out a mortgage for the home. While it’s true that a mortgage isn’t necessary, it might actually be a better financial decision. Let’s say the mortgage rate for your new property is around 5%, and let’s say the stock market investments are experiencing a return around 8%. If you mortgage your new property and put additional money in the market from your old house, that’s a +3% difference. I’m not a CPA or a stock broker, however, don’t assume that you won’t be mortgaging your downsize – it might actually work in your favor.
Whether you’re looking to buy, sell, or downsize in Northern Nevada, The Caroline Mathes Team has seen it all. With decades of experience and certifications in negotiation and real estate planning, I help my clients get the best possible outcome in their next real estate decision. If you’re looking to downsize with the help of a realtor, you’re already in the right place – contact me today, and let’s talk about your next home purchase.