All this talk of downsizing (selling a house that seems too large for you to move into a smaller sized house) seems to be yet another great money-making idea for the Real Estate world. Will you be happier downsizing? Richer ?
Real estate agents are attempting to dislodge folks out of paid off houses. Folks do this so they can “capitalize on the value of the house” and have “more liquid assets”. Is this better than reverse mortgages ?
The difference between your existing house and your new house seems to be obviously your “net gain”. What about other costs:
- The real estate fees for selling your house. Yes, you can try to sell that yourself, and save that money. Will you be able to sell to someone who doesn’t have their own agent? You can ask for a lower rate, remember that answer is always no, unless you ask.
- All of the associated costs to prepare your house to sell it, which can be a fair amount of cash as well. Some agents include that in their fees, but repairs could mean another big chunk of money. You can try to sell it as a Fixer Upper’s Dream, but that is going to knock the price down (a great deal).
- The cost of moving, given you are older, you are much less likely to find a bunch of friends who want to help you pack and move for Beer and Pizza, and the cost of a U-Haul Rental? Even if you promise not to move your rock collection.
- Land transfer taxes, no one likes talking about that one.
- Storage? I really hope not. Some folks might not do a “purge” of their stuff and then end up paying to store their valuables?
If your house is paid off, the question to think about at your new house is are the delta costs of your utilities at your current house and your new house going to be significant? Folks in Ottawa who live in Ottawa, that move to a more rural setting, find out that Hydro One charges in the country are actually much higher.
Is This Really For You ?
If you live in a 3000 square foot mansion, and are thinking about traveling a great deal, downsizing sounds like a better idea, but is it really going to save you money? If an agent calls you, maybe you can sit down and have them go through all of the costs?
Certainly there are costs to selling and moving into your new place, but they exist no matter when one decides to make a change. There are options to reduce ones cost, but most will just accept the reality fees because its easier than trying to much of it on your own.
We downsized two years ago and yes we had the associated expenses. However, I do feel we came ahead financially, but more importantly we gained much more than staying behind because:
1. we are retired and the cost and time of maintaining a house was adding up
2 we go south for the winter and having to get people to take care of the house and shovel snow was becoming a problem
3 even though we now pay a condo fee, overall our cost of living is much lower. Yes we have less space, but we didn’t even go into our old basement or use the extra rooms
4 the other people who live in the condo are the same age, or older, so we now have people to socialize with. In our old house the people were young families
5 we are much closer to shopping and ammenities
Deciding to downsize, like everything else depends on ones personal needs and situation. For us it was a good move.
Good to hear, sounds like you made the decision yourself, and I am glad to hear it. Downsizing can work, but you need to make the decision with your eyes open (and all the facts, to be even more obvious).