Rising rates have lit a fire under buyers, fueling already strong demand, at least in the short term. We’ve seen significant price appreciation among local houses.
However, on the sellers’ side, supply has been slow, with many empty nesters hesitant to come to market, even when downsizing makes a lot of rational and financial sense.
Have you considered downsizing?
Downsizing lets you lock in the equity you have built in your home and apply it to a lower priced home (or two!).
Finding a downsizer house can prove to be a challenge, whether due to short supply, the daunting task of getting a larger home ready to sell, or getting the timing and financing right, but we have strategies to help you through this.
Below are some helpful tips. We’d love to a trusted partner and assist you through the process.
Managing the Timing
How do I handle the timing? Do I find a house first or sell first?
The most successful strategy of sequence and steps that we have found is:
Selling first puts cash in the bank for your next purchase while renting affords you some flexibility on timing allowing you to shop while accommodating a seller’s preferred close date. Landlords generally will let you go month to month at the conclusion of a lease if you need a bit more time. Renting also gives you some cushion to do work in your new home which can be subject to unpredictable contractor schedules.
If you are close, but a little off on the timing of your sale / purchase, you might consider a sale/leaseback, wherein you close on your home, then lease it back for up to 90 days. The buyer has peace of mind they have a home secured and you get a little flexibility on closing on your new home, packing and any potential renovations.
Bridging the Financing Gap
In competitive markets, sellers favor cash offers or offers with appraisal waivers (which means that the buyer would need to bridge the gap between price and 80% of appraised value).
If you want to stay in your current home and need cash for your purchase, options available to you include tapping the recent equity gains in your home through a 2nd mortgage, or borrowing against other assets, like equities, retirement account or life insurance policies. Regardless of what you are considering, please consult your accountant or financial advisor first!
Considering Tax Implications
Downsizing affords the opportunity to reduce your monthly spending on your home, especially when it comes to taxes. The property tax implications can be significant when downsizing in this area, and we can advise which neighboring towns have the most favorable taxes.
For example – The taxes are about $15k on a 4BR, 3bth 2,000sf ranch on .36 acres, in Little Falls 3.5 miles from Upper Montclair village; a decent savings for many potential home sellers in the area.
Preparing Your House to Sell
Getting your home ready to sell can be a daunting task, but there are several ways we can help support you! We have resources to help you organize and divest of personal items, inspectors that will do an abbreviated “pre-inspection”, and handymen who can do some repairs and touch-ups.
Based on experience. we can advise which small projects around the house a provide the greatest return on investment. It’s best to get started early so reach out to us now.
Questions? Let me know!
We have decades of experience in helping people downsize in the local area.
Contact me to discuss a customized strategy for you and possible next steps.
3rd Generation Owner