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Things to Consider When Downsizing – Tips

Posted by Sarah Steen on February 22, 2022
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graphic image of older woman holding a picture of a house with "Downsizing We help clients create the vision of what their future home will look like"

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Downsizing: The New Definition

There are many reasons to downsize to a smaller home. People moving toward an empty nest or retirement age might want less upkeep in their home. Homebuyers in younger age brackets might downsize their home (and their mortgage payment) to reach financial goals. Other folks might just want to simplify their lives. This is evident with the popularity of the tiny house movement. As home prices continue to increase and houses seem to get more crammed together in suburban neighborhoods, tiny homes provide a somewhat inexpensive way to provide more mobility and space.

As you consider downsizing, you will likely hear the phrase “Aging in Place.” With our life expectancies extending, there is an additional phase of life between children leaving the house and the stage when we might need more help to “age in place” or live out our last years in our own homes.

For example, this could mean selling a 2 story, 5-bedroom home on a large lot and moving into a low maintenance home with a smaller lot and community amenities. Amenities could include gyms or pools, trail systems, fun events, etc. You could view it as downsizing your home maintenance and “upsizing” your recreational opportunities. Early downsizers range in age from late-40’s to mid-60’s and they are healthy, active, and looking to experience life in a way that was not possible while they cared for their children.

Some folks prefer to move into a neighborhood with age restrictions, low maintenance living, close proximity to medical services and amenities, limited need for driving, and an option to step up to higher level assisted living when needed. These types of options are referred to as Agent in Place.

We will focus on the Aging in Place phase of downsizing in this article.

Related Reading:
Homes Designed for Aging in Place
Universal Design

Reasons People Consider Downsizing:

  • Simpler life
    Homeowners who are looking for a simpler life with less stuff and clutter to have more time and resources.
  • Support system
    How far away are you from the family or friends that are your support system? Are they in a short driving distance? If not, you might want to consider moving and downsizing. We’ve had many clients considering a move closer to grown children and grandchildren, especially since the start of the pandemic.
  • Unused space
    People are taking a closer look at reducing their footprint in order to spend less money on rent or mortgage payments. Do you have rooms or even closets in your home that you rarely enter? These unused spaces have to be heated, cooled and cleaned.
  • Tied up value
    You could have a substantial amount of equity tied up in your home. And just like you might have unused spaces in your home, you potentially have cash tied up in items like antiques and collectibles stored there.
  • More time
    Are you dreaming of having more time for yourself instead of spending your weekends cleaning your oversized home and maintaining your large yard? This is also a very strong reason to right size.
  • Relocation or multiple locations
    Choosing to relocate could mean the cost of living means you have to downsize. Or maybe you are looking to split your time between locations or become a snowbird. You might have to reduce your home size in order to afford 2 or more properties.
  • Changing your lifestyle
    You might start looking for alternative options if you’re tired of your current lifestyle. Regardless of your stage in life, you might be considering a tiny home or even an RV to travel and enjoy life more. This might seem extreme, but it’s happening quite frequently now especially after the of stress of the pandemic.
  • Active adult lifestyle
    You are seeking a life with minimal maintenance and opportunities for friendships with other people in a similar stage of life. This type of community was popularized in the snowbird locations like Arizona and Florida. It has become a desirable lifestyle for any time of the year and any location in the country.
  • Assisted living
    If you are seeking a location with medical assistance close by and help with cleaning and cooking, then you will most likely opt for this choice. This option will likely have a higher price tag because of the services provided.

Related Reading
Active Lifestyle Communities in Colorado Springs
Retiring in Colorado Springs

Boomer Buyers

The largest group of downsizers are those of the Boomer generation and older. As this demographic ages, the ability to climb stairs and maintain a property becomes more challenging. Baby Boomers were born between 1946 and 1964. “Older Boomers” are the ones from the first decade and the “Younger Boomers” were born between 1955 and 1964.
line chart of generationsResource: NAR

Boomer Facts from the National Association of REALTORS

  • Boomers represent about 32% of all home buyers (14% were older boomer buyers and 18% were younger).
  • They are the largest group of home sellers at 42%.
  • They own their home 14-16 years on average.

Steps for Downsizing

Deciding to Downsize

Some people make a quick choice when it comes to downsizing while other folks can take months or even years to work toward a decision. Start small if downsizing is an overwhelming idea for you.  Brainstorm about what could be easier and how your life would benefit from this big change.

Create a timeline

Think about when you would like to have all your changes put in place and completed. Build a timeline from there and this will keep you on track with your goals.

Build Your Team

The number of decisions ahead can feel overwhelming and it’s important to take it one step at a time. The first step is to start building your team and know who you can depend on. Communication among your team is vital to avoid future conflicts.

  • Your loved ones Your family or friends that have been by your side for a long time. They will not leave you alone during this time either. Trust them, consider their opinions, and then make the decision that fits you best.
  • Your REALTOR You have to make the decision, but our team of REALTORs can help you imagine what your future might look like. We can also connect you with other professionals to achieve your goals. Contact us to start today.
  • Your Attorney One of the key players in your future. Do you already have a will? A trust? Maybe advanced directives or a Power of Attorney? These documents are created from uncomfortable discussions, but they bring peace of mind. Your loved ones will thank you for putting everything in place before a situation arises where you are not able to make [quick] decisions or formulate your wishes.
  • Your Tax Professional Your tax professional will be able to assist you with any considerations for your taxes. What could your move mean to your tax liability? What benefits do you have? They might even be able to recommend certain price ranges or exchange programs to benefit you.
  • Your Financial Planner He or she will also be able to give you detailed financial insights on what your move means to your investments, plans and your overall bottom line.

TIPS FOR SELECTING YOUR TEAM:

  • A new team in a new location: Acclimate yourself to a new location and reduce stress by building a personal support system that includes an outstanding real estate agent, property managers, a handyman, health professionals, and/or contractors.
  • Keep communication lines open: A clear line of communication will help keep everyone on the same page and moving forward together.
  • Local markets: Depending on your move, it may be difficult to fulfill your wishes in the current real estate market of your desired location. You may insist on spending no more than $250,000 on a single family, main level, upgraded home to live comfortably. However, that might just not be possible in Colorado Springs. Stay open to other options and be willing to adjust expectations.

Related Reading:
What’s happening in the Colorado Springs real estate market?
What Our Clients Say

Reduce the amount of stuff

Remember that moving is very expensive. Everything you decide to keep does have a cost. A quick analysis could help you determine if it is cheaper to just re-buy an item in your new location rather than paying to move it. You can sell the item at your current location, pocket the cash, and save on moving costs.

Quick tips for reducing household goods:

  • Go room to room in your house and create 3 piles as you sort through items: keep, donate or throw away.
  • Ask yourself: Have I used/worn this item in the past 3 years? This can help determine if you should keep, donate, or throw away.
  • Consider ordering a service to pick up trash.
  • Schedule a pickup from or Goodwill, DAV or Salvation Army to pick up anything that will be donated.
  • Declutter paperwork: sort by keep, digitize, shred. Consider converting photo albums to a digital format and store them in the cloud.
  • In the end, keep in mind that stuff does not define you. There is freedom in keeping what you treasure and what brings you joy.

photo of 3 older women with "Emotions come into play...even when it makes sense financially and logistically to right size

Detach yourself from your current home

Home is where the heart is, and it can be especially difficult to let go of your home and possessions if you have lived in your current home for a very long time. Remember to stay focused on the positive aspects of your new life and how much more time you’ll have once you make the changes necessary to get there. Starting to detach will make the home selling process easier.

Buying or Selling: Which comes first?

That entirely depends on your downsizing plan and timeline. There are several possible scenarios:

  • If you have enough equity in your current home, you could pull it out, qualify for a loan to purchase your new home, and then move after your closing. You can then list your previous home for sale. This is the ideal scenario.
  • List your current home first, wait until it is under contract or closed, then start looking for a new home. It is absolutely your choice whether you wait until it is under contract or closed to begin your search for a new home. Keep in mind that offers you make with a contingency to sell your current home will be less desirable to sellers.
  • Begin searching for the new home while the current home is being prepared for listing, but not yet on the market. The simultaneous buying and selling strategy is the most stressful because everything has to happen at the same time. If your home is not yet on the market, you should have it list-ready with pictures ready to go so listing can happen as soon as you are under contract for your new home. You need to have a real estate agent willing to beat the bushes and be communicative with the seller’s agent to assure them that you are a “sure thing” when making an offer. The tenacity needed for this transaction is something that we provide. Be prepared that the seller of the home in your new location will have deadlines and stipulations by when your current home needs to be under contract or your contract to buy might be terminated.
  • Feel free to ask us, your dedicated real estate professionals, for an agent in your area to interview. You can expect us to have the same tenacity whether we are helping you buy or sell. We strive to make your downsizing process as smooth as possible.

Related Reading:
Steps to Buy a Home
Steps to Sell a House
Buying and Selling Simultaneously

Next steps

When it comes to selling your house, your very first conversation should be with a listing agent to create a market analysis and determine the value of your home.

  • A market analysis will compare your home by location, size and features to homes in the area that have recently sold. This will determine an estimated sales price. Click here to request a complimentary home valuation.
  • A local agent that knows the market in your area is vital to this process in order to achieve the most accurate valuation.
  • You should receive a sheet with estimated net proceeds after all fees have been deducted. This is your equity. This might be the time to talk to your tax professional to learn if you will owe taxes on your proceeds.
  • Speak with a mortgage lender. This lender should be local to the home that you are purchasing. They can help you determine the amount you will qualify for, what your monthly payments will be and if you have to sell your home before you can close on the next home. Again, there are options and those need to be explored.

Related Reading:
How much money will I make?

 

Our team is always here to help and answer questions for every step of your downsizing journey. Give us a call 719-219-9739 or email susanna@co-regroup.com.

Click here to download your free home selling guide

 

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