The strength of the current property market is encouraging an increasing number of owners to sell their family home and downsize.
Thanks to the current boom in prices, if the cards fall your way then you’ll do well financially from this strategy right now.
But mistakes can be made when you downsize. To protect against them, you need to research the property market diligently, get good advice and be prepared to face up to the reality of your financial position – good or bad.
That’s because you want to ensure downsizing will deliver the lifestyle you want. One of the most common mistakes is to assume property values. While you get an excellent price for your current home, you might find a smaller home – perhaps a condo or apartment – is surprisingly expensive to buy or maintain.
Quarterly strata fees, especially in luxury locations, will quickly eat away at your cash flow if you haven’t planned for them.
As an experienced agent, I urge my clients to work through the numbers with a qualified financial adviser so this major decision in your life achieves the desired outcome.
Below is a five-point list to consider when deciding to make the move and downsize.
- Reduce expenses – Many owners believe this to be the most significant benefit to downsizing. However, you should not assume this is an automatic outcome. Instead, work with your accountant or financial adviser to plan your strategy and make sure you have the money you expect – or need – as a result of downsizing.
- Change of scene – After spending so much time establishing a family home, building a career and raising children, it’s common for homeowners to want to break free and start a new chapter in their lives. If you’re thinking of moving to a new state or city, it might be worthwhile to consider renting first to ensure the lifestyle is what you expect.
- Chasing your dreams – When your life changes, there’s an understandable urge to shake up everything. If you’ve retired or scaled back on work commitments, this is an excellent opportunity to achieve some of your life goals. If you downsize with the right strategy, you’ll be able to use the equity in your current home.
- Children get on with their lives – This is perhaps the most common motivation for downsizing. If you feel like you’re rattling around in your home, or cleaning rooms that haven’t been occupied for weeks, even months, then perhaps it’s time to make a move.
- No surprises – While your children have moved out, they may still have an emotional attachment to the family home. Therefore, I’ve found it beneficial to talk to them about your plans in advance so they understand your reasons and support your decision. They might argue with you, but at least you’ve given them fair warning.
If you’re thinking of selling your property, don’t hesitate to contact me. I’d welcome the opportunity to help you find the perfect downsized property for you in our neighborhood.