Downsizing in retirement is something I hear a lot about in the real estate field. But what people mean by downsizing can be widely varied.
What comes to mind when you hear “downsizing” is typically less square footage, but what most people really mean is that they’re looking to reduce their monthly housing expenses.
Downsizing in retirement can mean reducing the square footage, having lesser amenities or reducing the acreage where you live.
If, however, the problem isn’t cost or space but your current home no longer serves you, it may be time for a “resize.” Here are some things to consider before deciding which is right for you.
Downsizing in Retirement
Downsizing can also mean reducing the costs of home ownership, which will no doubt be a very difficult task. In order to reduce costs, you’ll most likely have to reduce the size of your home and/or property.
You’ll likely have to reduce the amount of personal property you keep and make some sacrifices in terms of location and/or amenities depending on your desired location.
Information is your ally when determining when the right time is for you to downsize.
My biggest piece of advice is to downsize before you are unable to.
The next steps to successfully downsizing in retirement are as follows.
Find out how much your home is worth in today’s market.
Have a licensed Realtor perform an in-depth comparative market analysis on your home. An appraisal will not cut it here, as market value and appraised value can be two very different numbers.
Establish your estimated proceeds from the sale of your current home.
Ask your Realtor how much you’ll net from the sale of your current home. The sale price is one thing, but the amount you have to put towards the new home is what you really care about. That number is after title, real estate, and other fees are taken off of the final sale price.
Meet with a local lender.
Now you know what to expect when you sell your existing home, you can get some advice from a lender as to how much you’d like to spend on the new purchase and set your budget.
Start Your Home Search.
With a budget in place and a pre-approval in your hand, you’re now ready to start the home search.
Keep an Open Mind.
When searching for homes, remember why you’re downsizing and keep an open mind. You’ll have to make some adjustments regardless, but remembering why it’s best for your family to do so will help keep a healthy perspective.
Resizing in Retirment
If cost of ownership and square footage aren’t a sticking point for you in your current situation but your two story floor plan isn’t speaking to your joints anymore, you’re in the resizing category.
Renovating your current home is an option that may be the best solution for you, but most families find this to be costly and creates problems for resale down the line.
While buying an existing home is an option, building a new home should be considered as well. New construction is a common option for resizers because it solves most of the problems at the forefront.
Here are a few reasons why.
1. You can build your new home around your budget. Starting the building process involves designing a home that fits your family’s needs and then making sure that plan fits within your budget. A transparent process allows you to get exactly what you want within your specific budget.
2. The new resized home will fit your family’s exact needs. Because you’re customizing the home from scratch, you’ll ensure the investment is truly the right fit.
3. The new home will require significantly less maintenance than a remodeled existing home. There will be less repairs to make, plus you’ll have some kind of builder’s warranty, though you want to check your terms
4. You can always build a new home within a community that offers association amenities like lawn care and snow removal.
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