Is it time for you to downsize with distinction?
Tips to enlarge your lifestyle through strategically selectively and sensibly moving to a smaller residence.
In decades past, the downsizing of one’s residence was often viewed as a negative event. This is no longer the case. Many homeowners are choosing to opt out of a large home in a traditional neighborhood and instead are embracing the chance to have a new adventure by purchasing a smaller property, offering the opportunity to escape the maintenance of their current home and enlarge their lifestyle. Downsizing to a sexy high rise apartment in an eclectic urban chic location is hardly what downsizing in your parents’ or grandparents’ day used to be. In fact, many downsizers are able to sell their home and purchase a smaller home in their current location to be near family as well as a vacation home or second home in a new and exciting destination! This enlarges not only their own lifestyle but also that of the entire family.
As you make plans to downsize with distinction there will be, of course, many emotional decisions to make and lifestyle preferences to consider. And we can’t neglect to examine the financial ramifications of your decision, in fact, for downsizers the financial side of the move is often the most important to sort through before moving on to the needs and wants in their next home.
As you begin this process you will want to examine:
- Are you looking to lower your monthly obligations and maintenance?
- What will the capital gain tax ramifications be?
- What will it cost to purchase your next home?
- Moving costs, staging and repairs on your current home.
- The timeline needed to make it all happen.
- How to accomplish all of this with minimal stress?
And perhaps the biggest question of all… “Do I buy first or sell first?” The answer to this question will largely depend on whether or not you can afford to purchase your next home without selling, by either paying cash or by carrying two mortgages until your current home sells and closes.
Many downsizers would find owning two residences to be very stressful and this is why most sell first before buying their next home. Some who have large sums of cash on hand may choose to pay cash, and move many if not all their possessions to the new home before listing their current residence.
To make a decision that is right for you, it might be best to discuss all of the options with a professional real estate agent, talk to a lender if financing will be needed, and consult with your CPA or tax attorney.
Once you have all the answers you need to make the financial choices that are right for you, you can then create a transition plan that is comfortable and practical. Because this is a big move it can be emotionally taxing and to make it less stressful you may want to begin the de-cluttering and staging of your present home well in advance. If you feel repairs or upgrades are needed, the advice of a professional real estate agent will once again be helpful. A professional real estate agent knows exactly what should be done to a property to help maximize its value and will help you avoid potentially spending money unnecessarily. Most real estate agents can provide you with referrals to stagers and other services that you may need as you give your home a tune up.
When is the ‘Right time’ to Downsize? Only you will know… as everyone’s housing needs are different.
Questions that might help you decide – Please take a few minutes to answer the following downsizing- related questions from Not Important to Very Important.
I want: Not Important Somewhat Important Very Important
To lower my maintenance [ ] [ ] [ ]
To lower my maintenance cost [ ] [ ] [ ]
To cash in my/our equity [ ] [ ] [ ]
To create greater family intimacy [ ] [ ] [ ]
To increase walking ability within community [ ] [ ] [ ]
To increase transportation efficiency [ ] [ ] [ ]
To improve my/our ecological footprint [ ] [ ] [ ]
To reduce cleaning time and effort [ ] [ ] [ ]
To respond to health reasons [ ] [ ] [ ]
(live on one level etc)
To live closer to children [ ] [ ] [ ]
To live closer to grandchildren [ ] [ ] [ ]
To respond to a divorce [ ] [ ] [ ]
To prepare for retirement [ ] [ ] [ ]
To travel more [ ] [ ] [ ]
To live more responsibly [ ] [ ] [ ]
To reduce taxes [ ] [ ] [ ]
To de-clutter [ ] [ ] [ ]
To experience change [ ] [ ] [ ]
To join an active community [ ] [ ] [ ]
To join a community surrounding with
recreational services such as a community pool, [ ] [ ] [ ]
Other: [ ] [ ] [ ]
While there’s no such thing as a ‘final score’ when deciding whether this is the time to downsize – given the importance of such a decision – the questions are meant for either one’s rigorous introspection or as discussion points for a couple or family.
By taking this quiz, it can help you (and possibly me) to better understand what is most important when you rent or buy your next home. Contact me for your complimentary Downsizing with Distinction consultation. Chris DeMattei – (916) 788-8822