Downsizing one’s home has long been a strategy for empty nesters. The kids are gone, rooms aren’t being used and the maintenance or upkeep feels like a lot. Others just want to find warmer weather or cash in on all that equity built up over time. After all, it’s also one of the strategies available to near-retirees that doesn’t include working longer, delaying Social Security or spending less.
But before you put up the ‘for sale’ sign in the yard and hire a realtor to show you homes fitting your new qualifications, check the math or whether the “price is right” for you to downsize.
Here are 8 costs associated with downsizing your home:
- Fixing up the house to sell – Does the bathroom need to be updated? Are there fence panels that are broken or new outlets that need to be put in? Will you be asked to replace the roof? These things can quickly add up.
- Staging the house – It’s a new couch, but an old chair, Aunt Susie’s china cabinet and the same dining room table from 1994. Will your realtor suggest making the house ‘show better’?
- Commissions to your realtor – What’s the cost to sell the home and how will that change the amount you walk away from the settlement table with?
- Packing and transporting – For some, you’ve accumulated a lot of stuff over the years. Will you need dumpsters, moving trucks or the assistance of a moving company?
- Condo/Association fees or annual rent hikes – The solution may seem less expensive but will other association fees, or membership fees eat into your perceived savings? Will your rent increase every other year?
- New furniture to fit new space – That old couch won’t fit the new living room. And the entertainment center is too big. What expenses will there be with furnishing a new place?
- Storage, parking, shed – A smaller house might mean a smaller garage. Where will all your lawn equipment, gas cans and bikes go? Do you need a shed, more storage, or need to pay for parking?
- Travel back and forth to old friends/family – The costs associated with your home may decrease, but will you need to double your travel budget for visiting friends and seeing the grandkids?
Downsizing can be the right strategy for any number of reasons. Just don’t rely on some quick napkin math when making one of the biggest financial decisions of your life. Give us a call. We’ll help you develop a plan that aligns your personal values, vision and wealth.