Five Options to Downsize in Turbulent Times

Dear Monty: I’m trying to decide what to do. I have a chance to buy a new home under construction. The builder will finish the home by spring. I have several reasons for downsizing now; a.) I love change, b.) I have friends living in the neighborhood. c.) It’s closer to many activities that I enjoy. d.) A new home has little maintenance for the first 20 years, and my house is over 20 years old. e.) Prices are going up in the subdivision. Last year, the homes were $30,000 less. f.) I’ve got about 2500 square feet now, and I live by myself. I’m wasting utilities, space, real estate taxes, and maintenance. Replacement time is at hand. I don’t want to get into moving if I’m much older. Do you have any advice, options, or thoughts I could consider?

Monty’s Answer: Many people are wondering about the concerns that you mentioned, so you are not alone. Some home sellers are concerned that if they sell their home, they won’t be able to find a replacement. In your case, you have a replacement in mind. Others are concerned with timing because they don’t want to take a chance on the cost of owning two homes if their home doesn’t sell in time. Here is a link to evaluate the risk of owning two homes. 

Your options 

1.Sell the home now, and when sold, then buy a new home. 

Pros – you know precisely the amount of your proceeds. Home prices may go down.. 

Cons – You may lose the home you like. You may have price increases.

2. Buy a home now and simultaneously put your home on the market. 

Pros – You lock up the new home price. You have months to sell your current home before you risk paying for two. There is no waiting. Reduce driving time. You get the smaller house you want. Your friends and services are closer. You like the change. 

Cons – You don’t know what your sale proceeds will be. Prices may go down. Your home may not sell before you have to close on the new one.

3. Sell now and rent for a year to watch the market. 

Pros – You have your equity earning high interest while you wait. You know your equity amount. Prices may come down. You will still have your friends. 

Cons – You likely will lose the home you want. Prices may go up. You may have to drive further.

4. Pause for a year in your current home. 

Pros: You have a year you don’t have to think about it. New home prices may come down. You may find a better home than the one you lost. 

Cons – Home prices may go up. You may not find a better home than the one you lost.

5. Stay put and remodel your current home. 

Pros – New flooring, painted woodwork, re-furbished kitchen cabinets, and new appliances will make it like new. You don’t have to move. You have extra room. Likely a huge savings. You will still have your friends. Your improvements will add to your home’s value. 

Cons – You lose the new home you liked. You lose the love of change. You have to drive further. You have more room than you need.

No one can predict the real estate market. 

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