Downsizing – the real cost of downsizing your home

People of all ages consider the need to downsize their home – whether due to divorce, health issues, and death of a loved one or the more traditional kids move out and leave a parent or parents home alone.

Downsizing is often considered the best solution and often people consider this before considering all the options.

It is possible to downsize your house without actually moving – here are some tips:

Review the amount of your house you actually use on a regular basis. Look for savings in power, heating and cooling costs. It may be possible to literally turn off parts of your house that you don’t use very often.

Making your garden smaller. This is pretty hard to do – but maybe you can get some help and pull out plants / grass etc that are time sappers – so you don’t have to worry about watering, weeding, mowing and pruning so much of your garden. If you have a pool and don’t use it – maybe its time to fill it in.

You may even have enough land that you can actually subdivide your existing property and you can sell the side block or the rear block – which will cut your garden down considerably.

Get rid of things you don’t use: Clean out your garage, have a garage sale or start giving things to family members or charities that might get some use out of them.

Next step is to think about the income generating possibilities of what you already have:

If you have two or three or even four extra bedrooms you might consider getting a tenant in that will help pay for some of the costs for keeping a bigger house. You may even be able to trade off some of the rent for someone younger and more agile looking after your garden and maintenance around the house.

You may also come to the realisation that a bigger house will hold its value better than a smaller house and as a result decide not to move at all.

You’ve done or considered all of the above and still want to sell your home then here are some of the costs you will need to consider budgeting for.

1. Real Estate Selling Fees – You can expect to pay up to 3% of the value of your home to a real estate agent as their selling fee. You will also pay up to $5,000 on the marketing of your property. (Obviously these figures vary considerably, but you should get a specific pricing and quoting from an agent). You will also pay up to $2,000 to a settlement agent / conveyancer / laywer to handle the transaction.

2. Moving Fees – You could expect to pay up to $5,000 to move your house depending on how much stuff you have and how far you have to move your property.

3. Stamp Duty & Capital Gains Tax – Stamp duty applies to the purchase price of the property you are buying. Capital Gains tax if you have ever used your home as an investment property (tenanted your home) you may have to consider the capital gains tax implications.

4. Bank Implications – You may need to discharge a mortgage and you will
need to know the costs associated with this.

5. New fees associated with your new property: You may be moving into a strata and need to consider common property insurance, water, strata management fees etc.

 

Before putting your house on the market it is advisable to buy your next property.

Here are a few things you should consider:

Can I afford to buy two houses with the proceeds of the sale of one? It might be worthwhile buying a city house and a beach house or an investment property. Alternatively you may simply want to have the spare money in the bank earning interest, whilst you plan your next holiday. You may also put the balance into your superannuation or other retirement savings mechanism.

You will potentially need to plan for a house with smaller spaces for dining room tables, beds, fridges etc so plan a budget to replace some of these items. You will potentially have less storage space in your new home so sort your clothing, your kitchen, your book and magazine collections and your garage.

When you get ready to price your home for sale – remember prices in some suburbs have come back to the prices of 2007, but not all of them. We have also just had several months of increasing interest rates and the fall out from the suggested super resources profit tax, has had a negative impact on consumer confidence and the stock market. If you want to sell your home – you have to price it to sell.

You will also need to get your house ready to put on the market, make sure your present your home in an as near as new way as possible to make it attractive to a prospective buyer.

What other benefits exist from downsizing – reduced energy prices, reduced rates and taxes, reducing your mortgage payments and reducing the maintenance of the property. Hopefully you will have created more time in your life and be able to spend more time doing the things you like, or you might be able to find a new hobby, do some more travel or simply relax.

You do also need to think about whether or not you can live in a smaller house or in a place where your neighbours share common walls or the same floor of an apartment building. It is also good to think about how you entertain – can your family, friends etc all find you in your new home and will you have space to entertain them.

If you need help buying or selling please call me on 0431 417 345.

By Peter Taliangis
Realty One
9330 5277
0431417345
peter@professionalsultimate.com.au

No Comments

Petertaliangis.com is the home page of Peter Taliangis – Perth property consultant and real estate sales agent. Petertaliangis.com provides information on Perth home properties, a listing of real estate properties for sale and other Perth property listings by real estate sales agent. Request your free Perth property report. If you're looking to sell or buy a house, Peter Taliangis can provide you with free property report, analysing marketing trends and property appraisals across Perth area. Free perth property data is available as well as recent sold properties by Peter Taliangis.