Jonathan and Kimberley bought their beautiful colonial home in the year of 1990. It was sprawling 2,400 square feet with 3 bedrooms and 2.5 bathrooms. They raised two sons who eventually left for college, fell in love, and got married.Jonathan and Kimberley loved their home, as it was full of warm memories. As the years went on, it became harder for Jonathan to do the stairs and when the Spring cleanup came, they began to dread it more and more every year as the upkeep of the property was beginning to take a toll on them both. Jonathan had suggested to Kimberly, that they should consider selling the house and moving to a smaller house that would be easier to maintain. Kimberly was very emotional,because of all the memories, and was torn. If they stayed in the house they would continue to deal with the hurdles of father time and the constant upkeep. If they move, they leave a house of birthday parties, barbecues, and Holidays.
This is a common theme for homeowners who are “empty nesters” and have too much house to take care of. Below are tips to consider if you are thinking about downsizing in 2019.
1. Where will I go once I sell my house?
You must consider the reason you’re selling to begin with. Whether it be the stairs in the house are too much, being able to afford the rising cost of taxes and water, or you simply don’t need the 4-5 bedrooms anymore. This will determine your next type of house you buy.
2. Speak with a Real Estate Agent and Accountant
You need to know the value of your house and what it could sell for in today’s market. This will give you an idea of what you can afford to buy next. You can also look on sites like:
What’s My Home’s Value . Keep in mind these are just estimated values and you should always hire a real estate agent to handle the transaction of your home, especially when you will need them to help you find your next home.
Speak to your tax accountant or financial adviser on what portion of the sale of your house will be allocated towards taxes etc.
3. What’s the Market Like Right Now?
Are we in a sellers’ market or a buyers’ market? Recently, we have seen some very strong sale prices of home’s. Most would consider this to be a sellers’ market, depending on where your home is located. The market is considered a sellers’ market when inventory levels are low and the number of buyers searching are high. The market is considered a buyers’ market when inventory levels are high, and the number of buyers is equal or low. Some experts are seeing a transition to a buyers’market as new inventory is slated to enter the market these upcoming years.
4. Suitable Housing Clause
If your house sells in a weekend, the thought of not having a home to go to next can be downright overwhelming. Your real estate agent will know what the market is like and will recommend a suitable housing clause. This clause protects sellers from being forced from their homes. The clause comes into effect when the seller puts their home on the market. Their agent, will disclose to potential buyers and their agents that the sale of your home is contingent on you finding suitable housing arrangements. This will allow you the time to find your next home without necessarily being rushed. In a sellers’ market, buyers want your home and are willing to cooperate with your arrangements.
Many home sellers have this backwards and want to find a home before they put their house on the market.The main obstacle they run into is that, many listing agents, (real estate agents representing the seller of the home you want to buy) sometimes won’t even consider your offer if you haven’t sold your house or at least have it under agreement yet. See an example below of what seller’s main concerns are by accepting your offer subject to you selling your house.
Jonathan and Kimberly submit an offer on their next home and it gets accepted with the contingency that they must sell their home to buy their new home. They then list their home with their agent, but they have listed it to aggressively and their house sits. Time goes by, and even though they have lowered the price, they still receive no offers and decide to take the house off the market and back out of their contract with the sellers of the new house they wanted to purchase.
5. Timing the Sale
What time of the year is going to get you the most money for your property but still provide you enough options to choose from? Many prefer the warm months naturally, however, this is also the time when everyone wants to list their property for sale. Going back to the supply and demand model, the colder months have statistically shown lower levels of inventory on the market which commands a more aggressive price for your property, combining that with the suitable housing clause, this should have you ready to purchase your next home by the warmer months. See the example below:
Jonathan and Kimberly list their home in February, since there were only 4 houses on the market, as March approached, the market was flooded with inventory for which they could choose from.
This all may seem overwhelming,but with the appropriate guidance of a professional full time real estate agent and the many resources they can offer such as attorneys, lenders and contractors, the transition can be very smooth.
As always, if you know anyone selling or buying, we would be grateful for an introduction.