Thinking of Downsizing? Consider Costs Along With Benefits.

Thinking of downsizing? For some deed holders, it’s a fantastic choice.

Just be sure you’re on the lookout for unexpected costs in today’s housing market.  

Here, we go through some scenarios so you can spot potential issues related to moving into a smaller place. Don’t let them catch you by surprise.

Looking for a Move-in-Ready Space? Check the Prices.

Townhomes and condos in homeowners’ associations charge for the upkeep and amenities they offer. Plus, some charge extra for parking, and don’t cover repairs for bathroom leaks, damage caused by a neighbor, and other unexpected issues. Be sure to tour the places in advance and talk with the residents about how they’re managed and what unexpected costs crop up.

To get your hands on the deed to an updated or new unit, you could need to prepare for higher monthly payments than you pay in your current home.

Smaller once meant less expensive. Today, small homes are rare and desirable. Many buyers need and want small homes, so expect competition. And if your soon-to-be new neighborhood is walkable, has good schools, transit options and natural spaces, the demand for it will be that much higher. So, the asking price per square foot on your next property may be above the price you paid for your larger, current home.

Selling an Older Home? You Might Need Patience.

Buyers are taking more time than they were a few years ago to make their decisions. And buyers, just like sellers, often hope to find spruced-up, turnkey units.

Renovating before marketing your current home could be worthwhile — but here again, it’s going to cost money. Ask a professional what to change to get the best return for your outlay. Agents know your market and have hard-earned advice to share.

You might find out that smaller design changes could be helpful, too. Getting rid of curtains, carpets, and wallpaper may be in order, to give your place a style upgrade and photogenic appeal for today’s generations of buyers.  

In any case, bidding wars aren’t exactly raging out there. Price your home accordingly.

You Might See Higher Mortgage Rates and Taxes

If you have a mortgage, and it’s under 5%, be sure you want to give that up when rates are 6%+. Then there are taxes to consider. Property taxes could be quite a bit higher once you buy a new home. Different places have different tax rates, and sales can trigger higher assessments.

In short: A home that’s less expensive on its face may have higher mortgage payments and taxes than you’d expect.

And of course, be sure to think about your new home’s proximity to your dentist, doctors, grocery stores and so forth. Will transit costs and bills change? Factor this in, too.

A reverse mortgage is one way to reach your home equity for cash. You might ask your financial adviser if it’s a better option than downsizing for meeting your financial needs.

Selling a Home Comes With Costs. Diligence Is Due.

Today’s closing costs are not for the faint of heart. Then there are moving expenses. Don’t forget the cost of setting up new utility accounts and the overlapping housing payments you might end up making when you’re leaving one address for the next.  

And after all that, you’ll probably need to furnish and touch up your new place.

Do the calculation on paper. Find out what you can really expect to save through your move. Sometimes, staying where you are is the simpler — maybe even cheaper — way to go.

Please note that Deeds.com doesn’t provide legal, tax, accounting or financial advice. Consult with your own advisers for guidance. If you’ve undertaken your due diligence and are good to go, excellent! Best wishes in your new, more manageable space.