Retiring and thinking of downsizing?

Brent Palmer
Brent Palmer
Published on July 23, 2018

If when you bought a home was far enough back that your mortgage is paid off, or nearly so, can I give you some advice? A lot has changed in the real estate industry since the 80’s, in both the selling and buying process.

Let’s get started

Things are a bit easier for you now, you don’t need to look for areas with good schools for your children, play grounds within walking distance of home, or taking into account how long your commute will be for you to get to work. Almost like being a teenager again where you can live where you want and how you want.

Moving may seem a little scary, especially if you have raised your children where you currently live, the true ‘family home’. Chances are it’s just the two of you living in your home now. Your lovely three or four bedroom home is not getting the use it once had, but the upkeep, rates and insurances will still be the same and going up every few years.

When you are going about your regular daily activities, do you think about your finances? Downsizing a home isn’t just a way to save on home maintenance costs but also a way to free up all that equity you’ve built up to use during your retirement.

If you have an accountant or financial adviser, now is a good time to make an appointment and discuss your plans with them before making any solid decisions. They can take stock of your situation and financial needs and advise a plan without the feelings side of it being involved.

Something to consider is the sale of your current home. Will you need to time the sale of your current home with the purchase of another? It can be a tricky process and I am happy to chat with you about it. There are many pros and cons, so many that I will do a separate blog on just this topic shortly.

Consider the advantages and disadvantages

If you’re lucky enough to have your house paid off already, you are in a much better financial position for downsizing than those with a mortgage entering retirement.

There are still other costs that we need to consider than just the selling and buying. First, if you don’t pay cash for the new home, you’ll have a mortgage payment. Since you’ll be buying a smaller home, however, your payments may be far lower than they were when you had a mortgage on the current home. You will need to factor in some money for moving costs, lawyers fees, possibly storage if you will be in between your previous and new home for a short while, which would also mean short term rental costs and possibly some new furniture etc. Your furniture is set up for a larger home remember. Will it fit when you are downsizing into the new house or will you need to sell and replace some items?

On the plus side, because the home will be smaller, you’ll save money on electricity, rates and maybe even lawn mowing. You may find your water bill smaller if you don’t need to water that large garden in the summer anymore, or as much. You may also have some left over from the sale of your previous home to spend on that dream holiday you have been planning for years.

But, before you can make a plan for downsizing, you’ll need to consider both sides of the issue, the good and the bad.

Yes, there are disadvantages in downsizing

As none of us have a crystal ball (well, I don’t anyway), it’s impossible to plan what new houses are going to emerge on the market. Perfection would be a hot seller’s market for your home which then magically turns into an equally hot buyer’s market for your new home.

The flip side however is that if you are buying and selling in quick succession, you will save money on at least one of your transactions, depending which market is hotter.

As the late Steven Hawking agrees. “One of the basic rules of the universe is that nothing is perfect. Perfection simply doesn’t exist … without imperfection, neither you nor I would exist,”

It’ll work with a good plan

My advice is to plan on selling your home as soon as possible. We are still in one of the best sellers’ markets we’ve seen in decades. To make the most money possible on the sale of your current home, get it on the market soon.

Downsizing, coupled with a move to a less expensive area may just mean all the difference, financially, during your retirement.

When considering downsizing, it’s important to consider not only the type of neighbourhood and home in which you want to live, but the financial aspects of the move as well.

Once you have had some financial counsel and have decided that it is time to sell, please give me a call and we can get started on the real estate part of your plan.

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Brent Palmer – Professional Real Estate Consultant

About the Author: The above article on Retiring and thinking of downsizing? was written and provided by Brent Palmer, a local leader in the field of Richmond and Nelson Real Estate sales, marketing, advanced technology for home selling, and social media. You can contact Brent Palmer here, or at 027 544 9921.

He has helped many people buy and sell homes in the Nelson, Stoke and Richmond areas for years, and would love the opportunity to help you as well.

Thinking of selling your home? I have a real passion for helping people sell their homes in our Nelson and Tasman Region, as well as the marketing, social media & advanced technology for home selling that goes along with it. I’d love to have the opportunity to sit down with you discuss how we can work together to get you the best price.

I help people buy and sell real estate in the following Nelson and Tasman  towns  & neighbourhoods: Wakefield, Brightwater, Hope, Appleby, Redwood Valley, Mapua, Stoke, Tahunanui, Atawhai and of course, Richmond and Nelson City. Connect with Brent on Facebook and pretty much everywhere else.

Know someone who needs help with real estate? Be rewarded and REFER them here