Downsizing 101
Downsizing 101
Whether you now need a downstairs master or you’re just tired of mowing the lawn, downsizing can solve more than just your housing situation. Let’s take a look.
Downsizing is a great idea for a lot of people.
For most, the idea comes along upon becoming empty nesters. The kids have moved out of the house, and there’s no longer a need for the additional bedrooms and square footage. Not only does no one go upstairs anymore, but that’s also a lot of dusting you just don’t want to do anymore. For you, it’s probably time to consider downsizing.
To others, it may not be the interior of the house that needs to change. We’ve helped clients who really enjoyed multi-acre properties but no longer enjoy maintaining that kind of yard. That’s downsizing, too.
Maybe you’ve spent some time in the suburbs while your kids were in school, but now they’re off to college and you want to move a little closer to the action with a downtown condo. Well, if you’re going to keep a similar budget, then you’re likely looking at a downsize of both interior and exterior.
There are a lot of benefits to downsizing, and if just one of them appeals to you, then it’s worth taking a deeper dive.
How are we going to do this?
First, let’s explore how in the world this is going to happen.
Hopefully you’ve read our 6 Steps to Selling Your Home post, but if you haven’t yet, I guess you’re forgiven. If you have, I’d like to take a look at how two of those steps are just a little more involved if your move is a downsize.
In Step 1, the Consultation, I would still recommend your first phone call be to your trusted real estate advisor, especially if your plan is to stay local. They will be able to tell you in broad terms where the market is headed, and help you identify a few areas that might make sense for you, given your current home’s amenities and your future plans. You might find out that downtown condo carries $700 monthly HOA dues that push that lifestyle right out of budget. Even in the case of a relocation, a good agent is going to find a local expert in your potential new town to help you talk through options that match your budget.
Here’s where a downsizing move differs from a traditional sale-and-buy move.
So far, we’ve been speaking to the empty nesters, and that’s why consulting with a financial advisor is an additional step in a downsize move. You need professional advice on how this move is going to impact your retirement. That can help you set a budget for your new home.
Step 3 in our 6 Steps to Selling is also a little different. Step 3 is staging the home, and if you’re still living in the home when you go to market it for sale, staging will mean (among other things) depersonalizing the house and clearing the clutter. It’s usually a good time to invoke the KonMari Method. Room by room, closet by closet, and in the attic, you’ll make three piles of all that stuff. Pile one will make the move with you. Pile two gets donated or sold. Pile three goes to the trash.
Since we’re talking about moving all that stuff from 4000 square feet or more, down 1500 square feet or less (yikes!), we’re obviously talking about a big undertaking. It might be a good idea to contact an estate sale vendor to help get this inventory down to the necessities. Regardless, you’ll definitely want to give your family a chance to lay claim to furniture, bedroom sets and everything else that just won’t have a place in your downsized life.
And that’s really what we’re talking about: downsizing your life.
What can this do for us?
There can be a ton of benefits to a move like this, and here are just a few things that it can afford you. To most people, the financial benefits are a leading factor. Not only does a downsized footprint usually carry a lower overall cost, but you’ll also realize a savings on the utilities costs, maintenance expenses, and possibly even lower your property tax burden!
When your monthly budget changes in all those areas, not only does your retirement savings get stretched, but it also frees up funds for traveling.
One of my favorite examples of a downsizing success came in 2015. Some of our former clients approached us about downsizing just like I described earlier - it was a husband and wife who had just been toying with the idea but didn’t know if it made sense. The main crux was that their current home had all bedrooms upstairs. Every day those stairs became more and more painful, and they began to realize that everything else they needed in a house didn’t really apply anymore.
They moved out to the suburbs to take advantage of great public schools, but the kids were all out of high school now. They had a 3-car garage in order to store lawn care equipment in the third stall, but guess who’s no longer doing the yard work. When they bought the house, they loved being on the same level as their kids’ bedrooms, but as I mentioned, those stairs were becoming a literal pain point in their lives.
Pretty much every impetus for a downsize was present, but they didn’t know where they stood in terms of equity. We found out together that they were in such a large equity position, that they were able to pay cash for a 2 bedroom, 2 bath home in a more densely populated area of the city and purchase a property for their children in their college town. They were able to eliminate their monthly housing expenses, and those of their children, while roommates of their children made the house a source of income.
That’s an unbelievable scenario made possible by their decision to downsize their life. For other people, it might just be a reduced monthly housing budget that stretches those retirement dollars. Or, it might afford you the opportunity to switch to a 15-year mortgage and work towards eliminating that debt more quickly.
If you want to talk through these scenarios and see what possibilities might exist for you, we’re just a phone call away. We are local experts who can help you realize your goals. Call us today!