The Ultimate Guide To Downsize Your Home
Congratulations! You are ready to downsize your home! When you last bought you had schools, commute, and community to think about. You needed space for toys and hobbies, birthday parties and barbeques.
Life is different now. When you downsize your home you create convenience and/or freedom. Perhaps you want to travel and a “close and go” home is your jam. Maybe you’d like to get rid of the multi-levels or the hassle inducing pool. Or maybe you want to reduce your monthly expenses and gain more financial freedom.
Whether you downsize your home in the same area or choose to move to a completely new city, here are the items to consider!
Why should you downsize your home?
Retirement – Have you thought about how you want to live your life after retirement? Would you like to travel without worrying about the house and yard? Would you like to live in another neighborhood now that your commute is gone?
Empty Nest – Do you need all those bedrooms now that the kids are gone? Or, perhaps you want to live in town and walk to shops and restaurants.
Less Maintenance – No one is using the pool or playing in the big yard anymore. Downsize your home AND your yard to maintain less and play more!
Health – Creaky knees and a wonky back makes navigating stairs a literal pain. Downsizing to a one level home might sound like heaven!
Reduce Expenses – If you could reduce your living expenses you have more freedom of choice. When you downsize your home you will probably free up a good chunk of money each month by greatly reducing or eliminating your mortgage as well as reducing utility and maintenance costs.
How do you downsize your home?
The decision to downsize is rarely a quick or easy process. Here are the basic steps you need to take:
- Decide if you will downsize in the same area or a different one
- Research cost of housing and living expenses
- Consult your tax professional for income tax and property tax transfer information
- Find out if you need to sell first or buy first
- Visualize your new space and the “stuff” that belongs in it
- Donate, give away or toss everything else
Where to move to when downsizing
**Check out the Downsizers Cool Home Collection. A hand selected collection of cool Downsizer Homes available on the MLS**
One of the biggest hurdles to cross when downsizing your home is deciding where to go. Here are some ideas to consider.
Different Lifestyle – the simplest move is to stay in the same area but move to a smaller, more convenient home. Condos, townhomes and patio homes are ideal choices for that “close and go” lifestyle. Consider moving into the downtown area where shops, restaurants, and entertainment are just outside your door! Of course, you might choose a smaller one story home with a smaller yard.
The town next door – have you thought about moving to Pasadena or Altadena? Or you might move just a little further away to Glendora or La Verne. This allows you to keep some of your former life while trying out a completely new community.
Different County – California is a vast state with a ton of interesting options. Would you like to live closer to friends and family in another area? You could choose to live in the mountains, desert or by the ocean. Be sure to check the Proposition 60/90 regulations for counties cooperating with property tax transfer as you consider this idea.
Different State or Country – This is the adult version of following your bliss. If you are planning to downsize your home because you are retiring you might be free to move anywhere in the world! Check out our video series “Where to Move To When You Downsize” where I interview my Realtor friends in other parts of the country about real estate and life in their neck of the woods. I ask about housing costs, living expenses and what the people are like in their area.
Pro-Tip Check out our post 10 Things Downsizing Buyers Need To Know
Expenses to consider when you downsize your home
When you downsize your home you will live a different lifestyle and incur different expenses. Here are a few things to consider and research before you move.
Taxes – If you do not take advantage of Proposition 60/90 by moving to a cooperating California county you need to understand the property taxes wherever you decide to move. Income tax is another important consideration if you move to another state.
Cost of Living – basic items like energy, gas, groceries and health care can fluctuate substantially in other areas. Kiplinger published an interesting guide on the most cost-effective states for retirees.
What to do with all your stuff!
I’d love to move, but I don’t know what to do with all of my stuff!
Isn’t it a little crazy to let stuff dictate your decision to downsize your home? Instead, let’s take a lesson from Marie Kondo and think about what you want to keep.
Imagine your new life. What are your ideal spaces and how are they used?
Imagine losing everything in your current home. What items would you replace immediately?
Now that you know what “sparks joy” in your life you are ready to let go of everything else. Here are some great resources to help you sell, donate or toss anything that didn’t make the cut.
How to sell your current home
Once you have decided where you will downsize your home it is time to figure out what to do with your current home!
Buy first or sell first? If your current home is paid off or has a lot of equity you may be able to buy your downsize home first. Consider a temporary loan from your retirement funds. a reverse mortgage, a hard money loan or an equity lineto access the cash you need for the purchase.
However, carrying two homes might not be an option for you. It might be financially stressful or you are not in a position to qualify for the financing. There are also a few benefits – you’ll know exactly how much money you have if you sell first and you can rent in your new area to familiarize yourself with your different options.
Best time to sell – when you downsize your home you typically have more freedom to pick your timing. We sell homes every month of the year in Glendale CA, but early spring to early summer, March to June is ideal. Your garden is at its peak and pool homes are especially attractive.
DIGGS Can Help You Downsize
You’ll get Straight Talk no Sales Talk to help you figure out your next move