4 Myths People Believe About Downsizing for Retirement
The idea of retirement is always made to look appealing in the media. The truth, however, is that not everyone has the financial means to enjoy a good retirement. Preparing for retirement at any age is challenging and scary. This is because of the unpredictable economy, low-interest rates, and emerging recession.
When getting ready to retire, the best approach is to first create your vision, priorities, and goals. Next, you should assess how much you will need for retirement. A lot of people agree that downsizing your home is a great idea before you retire, as it simplifies the transition process. However, there are a few myths that people believe about downsizing, especially how it will affect their income and lifestyle.
Preparing for retirement at any age is not only challenging, it’s downright scary especially in an unpredictable economy, with near-historically low interest rates and looming recession. When preparing for retirement, the best approach is to first create your vision, priorities and goals and then assess how much you will really need. Avoid getting caught up in the misinformation. Keep in mind these common myths, and plan your retirement with a big dose of reality. (1)
To avoid being misinformed, this blog post will highlight the four myths that people believe about downsizing.
Selling a House is Highly Profitable
A lot of people believe that selling a home is always profitable, but this is not always the case. While having a smaller home means less space to clean and maintain and a lower monthly mortgage, it doesn’t guarantee you financial freedom. You will definitely make money from downsizing, but it is not as much as you may think. Even if your home has beautiful views of the surrounding countryside or no mortgage, it might not sell for a high price as well.
Again, even if you are selling your home in a perfect market, it may take a long before you find interested buyers at the price you want to get. This is because you may be forced to complete necessary repairs and upgrades, such as floor plans and bathrooms, to attract buyers. The renovations might be costly, resulting in a reduced net amount when the home sells. If you want to make extra money through downsizing, you should look at your financial capabilities and determine other ways you can save money. In the case that you decided to sell your house fast for all cash, we can help you, we are Kansas City home buyers and we buy houses in Kansas City and the surrounding areas.
For instance, you can complete activities such as tree trimming or landscaping instead of paying a professional. Most times, downsizing has the opposite effect on what you intend to accomplish. In this case, you should consider hiring a reliable real estate company to make this process smooth and profitable.
A Smaller House Means Fewer Living Expenses
Depending on where you are moving from, and the city you’re moving to, downsizing to a smaller home may not save you as much money as you expect. If you’re leaving a rural area to live in an urban area, you must consider the cost of living. Houses in urban areas cost higher than those in rural areas. If you are looking for a luxury property, you should be prepared to pay a hefty price.
Condos even cost more due to things like swimming pools and backyards. Therefore, before you move into an apartment, you should know all the costs involved, including hidden costs. These hidden costs can be a surprise, later on, leading to financial difficulties. Another important to keep an eye on is the taxes.
The city you are moving to may have higher taxes, depending on the state.
Downsizing Helps You Save Money
Downsizing isn’t just about saving money. If you have been staying in your home for many years and you have paid off your mortgage, you may have built a substantial equity in your home. Selling a home that’s too big for you can give you money to add to your retirement savings. Having savings can be important during retirement, but making sure you have lots of money to live on once you’ve quit working is even more important.
For some people, however, downsizing their homes will be a major expense, and it may take a long before you can start to save enough money for the down payment. Further, if you can’t sell your old house and make some money from it, then the amount of money you save will be less than what you need to buy a new home. You can spend less on monthly bills by opting for a smaller space, but you could also end up spending more on relocating and home improvement costs.
Downsizing is Too Much Hassle
Listing your home on the real estate market can take months. You will need to let multiple buyers come to your home to see if they are interested in purchasing your home. In these circumstances, you will need to ensure that your home is in the best condition. This involves completing necessary repairs, which might take a lot of time and money.
Again, if your house is in a bad neighborhood, it may take years for things to get better, meaning your house will not sell until then. Similarly, downsizing is harder if you have not updated your home in a while. Plus, even after you have received a good offer, the buyer’s funding may fall through before the closing. A buyer may fail to get mortgage approval due to a low credit score or other reasons that may force them to cancel the deal.
In addition, a potential buyer may get cold feet even after the contract has been signed and things are moving forward. In this case, you will repeat the process of finding a new buyer, which may end up taking months.
Conclusion
Downsizing for retirement requires a lot of reasoning and aspiration to ensure that you are making the most out of your new home. Downsizing may mean selling your home or moving to another house. It is a complex process because you will be forced to spend money making your home look more attractive to buyers. However, you can opt to sell your house fast to get money to fund your retirement.
In this case, downsizing can be simple and straightforward. Selling your fast allows you to avoid the hassle involved in downsizing, such as renovating your home to attract more buyers. Selling your house fast also means that you can avoid following all the above myths that can be very misleading.
About the author
Benjamin Allgeyer
Benjamin Allgeyer is a real estate investor and the owner of Crown City Home Buyers, a cash home buying company based in Kansas City, MO. Benjamin has a passion for helping homeowners who are facing difficult situations, such as foreclosure or financial distress, by providing them with a quick and hassle-free solution to sell their homes. He is committed to providing his clients with exceptional service and helping them achieve their real estate goals.
We here at Crown City Home Buyers are dedicated to getting the most cash possible into your pockets for your home as-is, so that you can get the most out of this situation and prepare to move on. We will buy houses in any condition without you needing to fix your home before sale.