We often encounter clients grappling with a crucialdecision: should they sell their current home before buying a new one, or vice versa? This question is particularly pertinent for downsizers, as their circumstances often differ from other homebuyers. Let's explore the pros and cons of each option and how different scenarios might influence your decision as a downsizer.
Selling First: The Conservative Approach
Advantages
1. Financial Clarity: By selling your larger homefirst, you'll know exactly how much capital you have for your next, smaller purchase. This clarity is crucial for downsizers who often plan to use the
proceeds from their sale for retirement or other financial goals.
2. Stronger Negotiating Position: As a downsizerwithout a home to sell, you're often more attractive to sellers of smaller properties or condos. This can give you an edge in negotiations, especially in
competitive markets popular with downsizers.
3. Time to Declutter: Selling first gives you ampletime to sort through years of accumulated possessions, making your move to a smaller space more manageable.
Challenges
1. Temporary Housing: You might need to find interimaccommodation if you can't immediately secure your next home. This could be particularly challenging if you have specific accessibility needs or prefer to stay in a familiar neighborhood.
2. Market Pressure: In a rapidly appreciating market,the time between selling and buying could see property prices increase, potentially affecting your downsizing goals.
Buying First: The Ambitious Approach
Advantages
1. Seamless Transition: Buying first allows you tomove directly from your old home to your new one, which can be less physically and emotionally taxing for older downsizers.
2. Time to Find the Perfect Home: Without thepressure of having already sold, you can take your time to find a smaller home that truly meets all your needs, including accessibility features or proximity to amenities important for your lifestyle.
3. Renovation Opportunity: If your new, smaller homeneeds work to suit your needs (like installing grab bars or lowering countertops), buying first gives you the chance to renovate before moving in.
Challenges
1. Financial Strain: You may end up carrying twoproperties if your larger home doesn't sell quickly, which can be financially stressful, especially for retirees on fixed incomes.
2. Pressure to Sell: Having already committed to anew home, you might feel pressured to accept a lower offer on your current property, potentially impacting your retirement nest egg.
Market Conditions: A Key Factor for Downsizers
The state of the real estate market should significantlyinfluence your decision:
In a Seller's Market
When demand exceeds supply and homes are selling quickly:
- Buying First might be advantageous. With larger familyhomes in high demand, you're likely to sell your current property quickly after securing your new, smaller one.
- However, be prepared for potential competition whenbuying, as smaller homes and condos are often not just popular with just downsizers, but first-time buyers too, increasing your competition.
In a Buyer's Market
When supply exceeds demand and homes take longer to sell:
- Selling First is often the safer option. It ensures youwon't be stuck with two properties in a slow market, which could be particularly stressful for downsizers on fixed incomes.
- As a buyer, you'll have more negotiating power and a widerselection of smaller homes or condos to choose from.
Special Considerations for Downsizers
1. Equity Release: If you're counting on the equityfrom your current home to fund your retirement or purchase a smaller property outright, selling first might be the most prudent option.
2. Health and Mobility: If you're downsizing due tohealth or mobility issues, buying first could be beneficial as it allows you to move on your own timeline and avoid the stress of temporary housing.
3. Community Ties: If staying in your currentcommunity is important, you might want to buy first to ensure you secure a property in your desired location before selling your family home.
4. Condo Living: If you're transitioning from a houseto a condo, buying first gives you time to adjust to condo rules and lifestyle before committing to the sale of your house.
Making a Decision that’s Right for YOU
As a downsizer, your decision to buy or sell first dependson your unique circumstances, financial situation, and local market conditions. Here are some final tips:
1. Assess Your Finances: Carefully evaluate yourability to carry two properties if necessary, considering your retirement income and goals.
2. Analyze the Market: Work with your realtor tounderstand current market trends, particularly for the types of properties you're selling and buying.
3. Consider Bridge Financing: This short-term loancan help you manage the gap between buying and selling, potentially allowing you to buy first more comfortably.
4. Explore Contingency Clauses: When buying first,you might be able to make your offer contingent on selling your current home, though this can be less attractive in a competitive market.
Remember, there's no one-size-fits-all solution fordownsizers. Every situation is unique, and that's why it's crucial to get expert advice tailored to your specific needs. Reach out to us at The
Downsizing Collective.
We're a group of REALTORS® and other professionals who specialize in helping folks just like you navigate the downsizing process. We understand the ins and outs of this big life change and can offer personalized guidance to ensure you're making the best choice for your situation. Whether it's
understanding market conditions, weighing your financial options, or simply having someone to talk through your concerns with, we're here to support you every step of the way. After all, ownsizing is more than just a real estate transaction – it's about starting an exciting new chapter in your life, and we're committed to helping you make the most of it!