These days, it is as popular to cut down as it is to move up. If you have been longing to ditch your oversized, overcomplicated house in favor of something smaller and more appropriate for your current needs, you have to do a little planning.
Avoid these common mistakes so that your downsizing does not become a downward spiral.
Failing to Consider Future Needs
Downsizing means recognizing that your current home is not meeting your needs as you see them. When you buy a smaller home, it is crucial to perform the same kind of reality check about your future home.
Buying the little old house in the middle of the woods may seem like a dream come true, but it could become an awful decision 10 years from now if you end up not enjoying the isolation.
Make a list of your plans for the next several years, and identify any situations that could require more space, or consider property in a location with access to more services.
Thinking of Savings Over Practicality
Homeowners who have been drowning in a too-large house with an oversized mortgage may think that anything that costs less is bound to be easier. Should you consider moving from a larger single-family home to a condominium or town home, you must remember that there are benefits and disadvantages to all different types of housing.
You will usually pay much less for a condo or town home, but you also lose a few things in the process. Getting rid of yard upkeep may outweigh the increased noise you get by sharing walls with your neighbors, but, on the other hand, it might not.
Ignoring Potential Resale Value
Depending on the size of your current home and its estimated value, you may be able to get rid of your mortgage and even pay cash for a new home. However, paying so much less could make you less likely to consider future resale value. There may be a time in the future when you or your family need to sell the new home.
As such, you should make sure that even if the price of the home is much less, it is still a good value in an area with growth potential. Consider any factors that could affect the new home’s value. That way, you will not regret buying a home that loses value or does not appreciate much over time.
Ignoring the Market When Selling
Before getting settled into your new, smaller home, you'll need to sell your current home. Nationally, the real estate market is growing steadily. Listing prices were higher than they were a year prior, indicating that selling prices are going up. However, your local real estate market may reflect a very different reality.
For many people, the difference between buying a big home and a small home is timing. If you list a larger home when sellers of smaller houses are struggling to get their homes off the market, you may have to wait a longer time or accept a lower price. Make sure that you are selling at an good time, and consider waiting six months or a year to see if the market will improve if it is not doing well at the moment.
There are many financial benefits to downsizing your home, if you do it right. Take the time to research new homes with a critical eye, and you will avoid these common downsizing problems.
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