- Have the kids moved out of the house? If you no longer need all of those bedrooms due to kids moving away, it may make sense to simplify. Sure… these rooms can be available for them when the kids return, or for guests who may visit, yet at the same time they are rooms that have to be cleaned that wind up being heated and cooled with rarely anyone using them.
- Do you want to keep costs down? Expenses may be a major reason to downsize. Larger homes are expensive to maintain, to insure, to heat and cool, and cost more in property taxes. A smaller home will save you lots of money that can go toward retirement, travel, vacation properties, or even investment properties. The question of “when to downsize my house?” is often precipitated by trying to minimize household expenses.
- Are you going through a divorce? One of the most common reasons people downsize from their current home is because of divorce. While nobody plans for divorce, it is a common occurrence. A large percentage of the time the marital home is sold, both spouses end up with smaller homes, condos, or townhomes. Selling a home while getting divorced brings with it some tough decisions when it comes to real estate.
- Do you have a lot of equity in your home? If your mortgage is paid off and you own the home free and clear, or if you have considerable equity in your home, you may choose to sell your larger home and buy a smaller home thus giving you greater cash flow. Depending on the market and how much your home has appreciated in value, you may find that your home is worth far more than you realized. Make sure you are up-to-speed on real estate capital gains tax laws. This is one of the best home-ownership advantages given the fact that you can exclude up to $250,000 in profit if single and $500,000 if married. As great as the tax code is, if you live in a large home with lots of equity you most likely have a comparably large tax bill.
- Is your home in a desirable area? There are many factors that people consider when buying a home. You may have purchased your home because it was in an affordable area, or because it was easily accessible to work, school, and play. The more desirable your area has become, the more your home has increased in value. Quality neighborhoods have characteristics that the vast majority of buyers desire such as convenience and proximity to shopping, restaurants, schools, airports, and major thoroughfares.
- Do you live in a great school district? If you moved into your home because of the school district, you may be paying quite a bit more in property taxes – which made sense when your kids were in school. If your children are no longer at home, it may not make sense to continue paying a large portion of your property taxes to the school district. You could move to an area with much lower taxes without needing to worry about the school district. There is a direct correlation between schools and real estate market values. While taxes may be higher, you can also expect your home value to be that much higher as well.
- Are you worn out from taking care of your property? Large homes require a lot of maintenance, as do big yards. Keeping a large home clean and in good working order is a lot of work. A smaller home takes less effort to keep up (not to mention less yard work if any at all). Look at the advantages and disadvantages of homes vs. condos/townhomes. If you intend to travel a lot, you may choose the simplicity of a condo/townhome. If, on the other hand, you can’t stand the thought of losing control of what goes on around you, a single-family home may be the wisest choice. While downsizing, these are subjects that should be carefully considered.
- Do you want a change of scenery? A big home can begin to feel like an anchor. Sure, it may be impressive, but even the most impressive home can start to drag you down if you are ready for something new. You may be ready to live next to the ocean, or in the mountains, in town or in the country. Many times people simply want something different which is perfectly okay. Maybe the hot desert air is calling your name. Perhaps you want to relax in a quiet, seaside community. Or it could be time to move to a smaller town for a slower pace of life.
Contact us today if we can assist you!