Downsizing Your Home? Follow these 7 steps.
Downsizing you home can be an important move toward improving your quality of life or adjusting to your evolving personal and financial needs. Follow these seven important steps when considering and then making the move to downsize your home.
- Make sure you understand why you are downsizing. This is the first and most important step in the process. Is it to simplify, reduce upkeep time and expenses, be free to travel more, eliminate stairs, get closer to family, be closer to amenities, reduce commute times, increase home security, save money, enjoy a warmer climate, etc.? The answer to these questions and others specific to your unique situation will guide you toward the right home.
- Be sure to consider what you will and will not be willing to give up by downsizing. Try to distinguish between your wants and needs. Make sure you are ready to make the sacrifices required to realize the benefits you seek. Remember that not everything from your current home will fit into a smaller one. Once you have the answers to these questions, you are ready to develop an accurate concept of your smaller home.
- Develop a detailed description of the home you will be buying. With the answers from steps 1 and 2 you can establish a house hunting check-list and home description including square feet requirements. Be sure to measure current home furnishings to know if they will fit into your new home footprint so there are no surprises. You'll also need to assess your storage requirements to make sure you can accommodate them. This could include off-site storage or, better yet, getting rid of items that you no longer need.
- Make sure you understand the financial implications of the move. Learn how much your current home is worth, how fast it will probably sell and if there will be any tax implications to consider. Get an estimate of the cost of the new home. Evaluate the pros and cons of PUDs and HOA fees that may be associated with a new home. Know how insurance costs, utilities, property taxes and maintenance costs will impact the total cost of ownership.
- Choose your new home location(s) of preference. Be open minded in order to find the house that is best for you. There are many factors to consider so do your research. Proximity to family, friends, recreation, shopping is a primary consideration for most. But there are other factors to consider including security, privacy, cost of ownership, upkeep requirements, social opportunities, and marketability of the property to name a few.
- Choose a strategy for concurrent home selling and buying. To do both at the same time is a little tricky. Ideally, you could sell you existing home and buy another at the very same time, but has not proven to be a likely event. You need to have a contingency plan. Here are a few options to consider:
- Plan to make an offer on a new home contingent on the sale of yours. Unfortunately this is not a very good strategy in a seller’s market and you will probably lose out on the best buys.
- Sell your house with a rent-buy back agreement which allows you to stay in your home and pay rent to the new owner for 60-90 days. In a seller’s market, this has a better chance of working.
- If you own your home outright or if you are in a financial position to own two homes, you can buy your new home in advance of selling the old one. This is a very good option if you can qualify since it eliminates the need for interim housing and the potential for two moves. However you will have to pay two mortgages (or a short term loan if you own your home outright) until you sell your existing home sells. Be sure to get pre-qualified with a lending institution before relying on this plan
- Sell your own home first and move into a short term rental or stay with family until you find a home to buy. You can store most your things temporarily to minimize packing and unpacking.
- Now you are ready begin the challenging journey of selling and buying a home, but you don’t have to go through this process on your own. Find a real estate professional who is willing understand your objectives as both a seller and buyer and who will help you navigate the foregoing steps in order to develop and implement a well-conceived transition plan. If you're ready to downsize, or if you are just thinking about it, I invite you to contact me for a free, no obligation consultation.