When it comes to retirement, many people try to find ways to simplify their lives, and one of the best ways to do this is to downsize their home. We buy houses in Middlesex, NJ, and we deal with a lot of clients who have decided to move from large estates to simpler, more humble abodes. Here are some of the things we learned from them.
Make Sure Your Kids Know You’re Moving
This might seem obvious but are people who sell their Middlesex homes without informing their kids about it. Sure, your kids are probably grown adults at this point with their own lives and, ideally, their own homes, but it’s still a good idea to let them know that mom and dad are selling their childhood home!
But it’s not just common courtesy: having your estate in order is essential if you want your family to be at peace when you eventually pass away. It might sound macabre, but it’s a cause of concern for many families who might be thinking about switching properties.
Keeping your kids in the loop with your financial decisions –especially in your golden years –is a great way to fend off any legal complications that might crop up in the future. For a lot of people, having a living will or hiring an executor to deal with your estate while you are alive is a great way to simplify things while you’re still living.
But the easiest solution: just explain your situation! As people get older, a large home becomes harder and harder to maintain. If you’re not a descendant of some industrialist in the gilded age, you probably won’t have the funds to maintain a multi-acre mansion, and frankly, that’s not a great way to spend your money either.
Talk to your kids and make compromises: maybe you cut them a slice of the profits from selling their childhood home, or have them choose your next home which, ideally, will be smaller and easier to maintain.
Determine the Amount of Equity You Have Before Downsizing
If you’ve been a responsible mortgage borrower and have successfully paid off all your debts and are now in full possession of your home, congratulations! Your Middlesex home might actually be worth more than what you paid for!
Having considerable equity in your home means that you can sell your home, buy a smaller, more manageable property in a decent area, and still have a sizeable amount of money left over for luxury purchases (or something more responsible, like savings or investments).
An ideal situation for you would be having positive equity in your Middlesex home, a strong housing market, an ideal location, and a year-on-year appreciation of your property. If all these things happen for you, then you may find that not only is your Middlesex home more valuable than what you initially paid for, it might actually be worth double or more. With the money you make from that sale, you can purchase a more manageable but still comfortable property, then reinvesting the rest of the money to create a continuous revenue stream for you and your family. Or, divvy up the profits between yourself, your spouse, and your kids, and then buy yourself that Harley Davidson you’ve always wanted. The world is your oyster.
All that being said, however, just make sure to clear all your financial decisions with your family and make sure you’re up-to-date on your real estate capital gains tax laws. If you were a hard worker throughout most of your life, you may find that your luxurious estate comes with a hefty tax bill. Not to worry, though: most real estate capital gains tax laws allow for people to exclude up to $250,000 in profit if you’re single for life, or $500,000 if you managed to hold on to your spouse until retirement.
Consider Your New Home’s Maintenance Needs (and Yours)
Sure, it might be tempting to move to a small cottage in the middle of nowhere or a home in the middle of a sizeable tract of land, but let’s be real: your downsized home needs to be able to fulfill your maintenance needs too.
Yes, living in a condo is easier because maintenance requires a quick call to a professional cleaner (or, depending on your building, the in-house housekeeping), but if you’re tired of riding elevators all your life, this might not be the best option. Alternatively, living in an isolated house with a lot of privacy might seem like a good idea, but you’ll have trouble during emergencies, or just regular upkeep like getting groceries or having your children visit.
Consider carefully what your new home means for you and your retirement. Of course you should consider how easy it is to maintain, but you still need to consider whether it’s the right purchase for you.
Your Best Option: Sell to a Professional Home Buyer!
We buy houses in Middlesex, NJ, and we know how difficult it can be for people to downsize, especially in their retirement. But this is why we’re the perfect people to help you: our team has decades of collective experience under their belt, which means we can help you get the best bang for your buck when you decide to sell your house.
Contact Quick N Easy Offers today, to learn more about how we can help!