By David McMillin
“The bigger, the better” is an adage that doesn’t always ring true, especially when it comes to where you call home. If you feel that your home is becoming harder to manage, it might be time to consider downsizing.
When is the best time to downsize your home?
Downsizing doesn’t necessarily mean downgrading your lifestyle. You might be able to enjoy it even more. A Homes.com survey of more than 1,000 homeowners who had downsized revealed that the biggest benefit of moving to a smaller space was creating a better budget: 62 percent of respondents indicated that they were spending less money, and 50 percent said they were able to save more money. In addition to saving money, downsizing can help eliminate some of your responsibilities: A smaller space with a smaller (or no) yard means less time vacuuming, dusting, mowing, and doing all the other chores required to keep a home in tip-top shape.
If you’re thinking about downsizing, ask yourself:
Are your living expenses too big for your budget?
Your home is likely your biggest expense. Whether you’re paying rent or making a mortgage payment each month, do the math to determine what spending less could mean for your finances. While this question is especially important for retirees living on a fixed income, it’s equally crucial for young professionals to consider, too. If you’re spending too much, you’re likely saving too little. Downsizing can help lay some of those worries to rest.
Do you have unused space?
Perhaps your children recently moved out, or you no longer need your home office setup. However, if part of your home has become a place for you to store more stuff, it’s time to think about whether you’d be better off paying for a much cheaper storage unit — or getting rid of a lot of those possessions altogether.
Would a different living arrangement be better for your future needs?
While your current home served you well in the past, think about what’s in store. For example, will the stairs to the second-floor bedroom become a potential hazard? Perhaps you’re single and just accepted a new job that’ll require regular weekly travel. If you’ll be gone so often, do you need extra space to entertain guests?
Where will you downsize?
If you determine that downsizing your home is the right decision, it’s time to think about the next question: Where should you go? Consider these factors:
How much space will you need?
You’ll be looking for something smaller, but how small is realistic? Of course, you’ll need to think about where your belongings will fit, but you should also consider what you’ll need to enjoy life. For example, do you still want to have an extra bedroom for guests? Will you want an outdoor patio for entertaining? Think about your regular lifestyle and those special occasions to make sure you aren’t looking for something too small.
Will you stay in the same area?
Once you have an idea of the type of home you’ll want to buy, be sure to educate yourself on price trends where you’re looking to buy. If you’re considering relocating to a new city to be closer to friends or family — which can be a valuable benefit of downsizing — browse smaller property listings to get an idea of what you can afford with your budget.
How much privacy do you need?
If you’re in a single-family home with a backyard, you’re accustomed to your own space. However, downsizing often means looking at alternatives such as condominium buildings, townhomes, and other living arrangements that feel more like a community than having distant neighbors. If you’ve been living on your own and would appreciate some of the built-in companionship that comes with those spaces, you’re in luck: Those units tend to be more affordable than standalone homes. However, if you value privacy and quiet, you might want to look for a smaller home instead.
Are you willing to pay more for extra amenities?
While you will save money by downsizing, you can spend extra cash for certain perks such as a community pool, a clubhouse, a doorman, and other amenities typically part of homeowners associations. Think about any features that would make life more enjoyable and what you’re willing to pay for them.
Where can you enjoy fewer responsibilities?
In addition to extra amenities, you should compare condos, townhomes, and community options to determine where some of the big maintenance and upkeep duties will be out of your hands.
Six steps to downsize your home
1. Plan your timeline
Downsizing doesn’t happen overnight. Depending on how big your home is and how long you’ve lived there, you will need to dedicate extra time and energy to work toward moving out of your current place and into a new one. Think about whether you should work toward a specific deadline — before that big property tax hike is set to go into effect, for example — or if you simply want to set a goal to make the move within the next year.
2. Organize, declutter, donate and purge
Once you have your timeline in place, it’s time to tackle the challenging work: separating what to keep from what to toss. Start by collecting your essential documents, such as your Social Security card and passport to ensure they aren’t lost in the shuffle. Then, move on to the rest of your belongings on a room-by-room basis. Break your work into small projects to help you feel a sense of accomplishment. For example, aim to finish the spare bedroom and the closet in one week. Then, give bigger sections — an attic with years of mementos, for example — a longer timeline. Take donation piles to Goodwill or the Salvation Army regularly to help gauge your progress.
5. Prepare for the change
The longer you’ve lived in your home, the more overwhelmed you might feel getting ready to leave it behind. Don’t deal with the process alone. Talk with a friend or family member as you sift through the emotional weight of a big change. With family members, make sure you ask if they would like to hold onto any of the items in your donation pile — you might be better prepared to deal with the change if you know that sentimental belongings, such as a china set passed down between previous generations or jewelry, will remain in the family.
4. Sell your home
When it’s time to sell your home, you’ll want to find the best route to maximizing your profit from the sale and minimizing your stress from the process. Look for a real estate agent with expertise in your market and your type of property, or request an instant cash offer from Opendoor. Since working with an agent traditionally involves paying a 6 percent commission (3 percent to your agent and 3 percent to the buyer’s agent), you’ll want to weigh which ultimately matters more to your circumstances: potential upside with your home on the market, or the convenience and time savings of a cash offer.
5. Get a new mortgage
As you’re working to sell your home, you’ll also be looking to find a new one at the same time. So, selling your home will likely need to coincide with the process of applying for a mortgage and looking for a new property (and there are now easier ways to accomplish this, called “buy and sell” programs) Also, if you are significantly downsizing, you could consider securing your belongings in a storage unit and/or living in a short-term rental.
Finally, it’s time to move. This is when all your work pays off. After organizing and getting rid of some of life’s accumulations, your lighter load can come with the good news of a lower moving bill.
This article is also posted on Bankrate here.