Tips for Selling Your Home When Downsizing in Retirement
Introduction:
Downsizing in retirement is a common goal for many Baby Boomers looking to trade their current homes for something smaller, cheaper, or easier to manage. However, navigating the real estate market can be challenging. This article provides valuable tips for selling your home when downsizing, including understanding the value of your home, negotiating commission rates, understanding the housing market, decluttering and staging your home, and knowing your home’s cost basis.
Know What Your Home is Worth:
Before selling your home, it is important to have a basic understanding of its value. Online sites like Zillow and Realtor.com offer estimator tools that can give you a rough estimate. However, it is also recommended to consult with local real estate agents to get a more accurate assessment. They have the knowledge and expertise to provide an informed opinion on your home’s worth.
Negotiate the Commission Rate:
Traditionally, real estate commissions were non-negotiable. However, recent developments have changed this landscape. In October, the realtors’ association and several brokerages faced a $1.8 billion judgment in an antitrust suit that claimed commissions were artificially high. Subsequently, a $418 million settlement was reached in March, pending approval, which promises to change how commissions are paid. Sellers now have the opportunity to negotiate commission rates with their agents, potentially saving them money in the process.
Understand the Housing Market:
While demand for properties is high and mortgage rates have decreased, downsizers may face challenges due to low inventory and higher prices. Federal Reserve Chairman Jerome Powell believes that the U.S. housing market is undersupplied and will remain so for years. This situation can make finding a downsized property more expensive not only in terms of price but also in taxes, HOA fees, and interest rates. It is crucial for downsizers to be aware of current market conditions and adjust their expectations accordingly.
Declutter, Donate, and Throw Away:
When downsizing, it is essential to declutter your home. Instead of asking your children if they want certain items, consider seeking assistance from specialists who can help manage all aspects of decluttering and downsizing. The National Association of Senior & Specialty Move Managers is a valuable resource for downsizers. By decluttering, you can maximize the appeal of your home to potential buyers and make the downsizing process smoother.
Stage Your Home:
To attract buyers and secure a quicker sale, staging your home is crucial. Investing in staging can help potential buyers visualize the home’s potential and create an emotional connection. In turn, this can lead to a higher selling price. Manhattan interior designer Ronnie Rosenberg emphasizes that staging is an effective strategy that can yield positive results.
Know Your Home’s Cost Basis:
For tax purposes and to justify the list price to buyers, it is important to document all repairs and upgrades made to your home. These expenses are considered home improvements if they add value, prolong its useful life, or adapt it to new uses. By documenting these investments, you can reduce capital gains exposure and demonstrate the value you have added to the property.
Conclusion:
Downsizing in retirement requires careful consideration and planning. By following these tips, homeowners can navigate the real estate market more effectively when selling their homes. Understanding the value of your home, negotiating commission rates, staying informed about the housing market, decluttering and staging your home, and knowing your home’s cost basis are all essential steps towards a successful downsizing process.
