Avoid these mistakes when downsizing
The kids have moved out. The yardwork is making your joints ache. And you're tired of heating, cooling, furnishing, maintaining and paying for a larger home than you need.
It sounds like you're an ideal candidate for curtailing your real estate footprint.
But before you go gung ho into downsize mode and list your existing home for sale, heed some cautionary tales from the experts, who say it's easy to make mistakes before and during this lifestyle transition.
"Homeownership often follows a predictable pattern," says Bruce Ailion, an Atlanta-based Realtor, real estate investor and property attorney. "Typically, people begin with a starter home. As their income and household grow, more space is needed, so their home size grows again. Many experience success and want their home to reflect their greater prosperity, so they buy a bigger home in a better neighborhood. Then, their household size begins to shrink, their income plateaus or declines, and they realize they have more house than they need. So they move on to a smaller home, condo or attached residence. It becomes a circle-of-life kind of pattern."
The problem is many downsizers suffer movers' remorse because they failed to anticipate future needs correctly and plan appropriately.
J. Keith Baker, a mortgage banking professor at Dallas College in Irving, Texas, says many folks realize too late how impactful the choice to move is and second-guess that decision.
"They misjudge how much they'll miss being closer to family, friends and neighbors. They misjudge the monetary and emotional costs of selling, downsizing possessions, purchasing another home, and making the move, which can also drain some of the perceived equity that many retirees were banking on," says Baker. "They also regret not being able to do some of the same things they did previously, like host holiday parties or have grandchildren sleep over."
Another common mistake is over- or underestimating how much space you require versus desire.
"They often begin the downsize process realizing they have too much space but then move into a smaller home that's still too large or small for their actual needs," says Nathaniel Hovsepian, owner of The Expert Home Buyers in Augusta, Georgia.
Ailion seconds those thoughts.
"People commonly focus on 'downsizing' instead of 'right-sizing.' The latter involves finding a place you'll be comfortable in for 10 or more years and that is mutually agreed upon by all occupants and affected family members," says Ailion.
Another no-no? Basing your decision mostly on money.
"Many downsizers think about the dollars they'll save on housing costs and real estate taxes first and foremost. They give short shrift to the lifestyle they should be hoping to achieve and how they will meet people, socialize and spend their days," cautions Alison Bernstein, founder and president of Suburban Jungle, a national real estate advisory and tech platform with a burgeoning "ReSizers" division.
Fast-tracking the entire process can be another big misstep.
"For example, you may throw things away that you don't think you'll need only to realize later you wish you had those things back," adds Hovsepian.
It's common and understandable to make some of these mistakes. After all, selling a familiar home and buying another one is an emotional process that can sometimes cloud your best judgment. It's easy to assume that the grass will be greener on the other side of this real estate transition only to later learn that things aren't as ideal as you had hoped. And we're humans -- prone to making errors and overlooking factors that should be carefully evaluated before making a major commitment.
So to sidestep these and other mistakes, count on doing more due diligence.
"Consider the decision based on your long-term plans, and evaluate several options," recommends Ailion. "Be sure that it's a mutual decision that all stakeholders -- including your partner and impacted adult children -- can agree upon."
Take plenty of time to reach your decision, too. If an opportunity seems too good to be true, it probably is. And if anyone tries to rush or pressure you into a decision, resist and do your homework.
Lastly, once you've decided to move, "spend time carefully evaluating your belongings. Decide what you need and use regularly versus what you can live without. Properly sorting through your possessions to determine what's truly worth keeping can make a big difference," Hovsepian suggests.