TheArtof Downsizing
-InitialThoughts
-TheDemographics -TheData -Strategies -FinalThoughts
WhyDownsize
●Typically,peoplelooktodownsizenearretirementage.
●Makeslifeeasierandspendlessmoney.
●Livesomeplacemoreconvenient,withspecificamenities, closertofamilyorotherfocalpoints.
WhyDownsize
●Minimizingfinancialoverhead–taxes,insurances, maintenance,upkeep.
●Simplifyinglife-lessmaintenanceandwork.
●Freeinguphomeequityforotheruses.
TheDownsizingConversation
●I’dlovetosell.
●Ratesaretoohigh.
●Themarketistoocompetitive.
●I’dhavetosellmyhousefirst
○Idon’twanttobehomeless.
●There’snoplacetogo.
●Whydon’tyou?
●Doyouneedamortgage?Ifyoudo…willthehigherrateeven matter?
●That’sanadvantagetoasellerlikeyou,andyou’llbeavery strongbuyer.
○Doyouthinkit’sgoingtogetlesscompetitive?
●Whatifyoucouldbuyyournexthousewithouthavingtosell first?
●Wheredoyouwanttogo?
○Ifyoufoundwhatyouwanted–areyouready?
TheDemographics
33-yearoldin2006 (bornin1973)
33-yearoldin2023 (bornin1990)
TheData
Months’supplyreferstothe numberofmonthsitwouldtake forthecurrentinventoryof homesonthemarkettosellgiven thecurrentsalespace.
EssexCounty–MarketActionIndex
-Isitabuyer’sorseller’smarket?
-Isthemarkethot?
-Howdoweusedatatoprovethis?
-MarketActionIndex-foranat-a-glancemeasurementof marketconditions.
-Abarometerofrealestatesupplyanddemand.
-Itshowswhetherit'saBuyer'sorSeller'smarket.
-30isaneutralmarket-onebuyerperseller.
-Avalueabove30indicatesdemandisrelativelyrobust, whichisreferredtoasaSeller'sMarket.
-Below30isaBuyer'sMarket.
-Usesallthemajorindexestodeterminemarket competitiveness.
EssexCountyData
DownsizingStrategies
LeveragingInvestments/Retirement
60DayRollover
TakemoneyoutofthequalifiedplanorIRAandusetopurchaseanew home.Sellexistinghomeandcompletetherolloverwithfundsfromsale ofcurrenthome.
Benefits: Noclosingcosts
Nounderwriting
Notaxationwithin60-daywindow
CASHBUYER
LeveragingInvestments/Retirement
Non-QualifiedAccountMarginLoan
Benefits:
Noclosingcosts
Nounderwriting
Notaxation
Paymarketrateonloans
You’reborrowingyourownmoneyupto50%ofaccountvalue.
Doeshavevariableinterestratetiedtoprime
Couldhaveamargincall
Benefits:
LeveragingInvestments/Retirement
Littletono“closingcosts”
Nounderwriting
Notaxationaslongasloanispaidbackwith5years*dependingonplan
Interestonloanispaidtoyourself
Limitedto$50kor50%ofbalance,whicheverislower
LeveragingYourCurrentProperty
CashOutRefinance
Benefits:
Positionedaheadoftimetowriteacheckagainstyourcurrentproperty
80%ofhomevaluecanbeutilized
Maximizeyourcashcapabilities
Don’tneedlargeinvestments/cashassets
CASHBUYER
DelayedClosing
SellyourPrimaryResidencebutwaittoclose
Agreetotermswithbuyerswhileyoushopforthenextproperty
Benefits:
Sellersdrivethetransaction
Buyerwaitsuntilthesellerisready
Allowstimetoshopforthenexthome
Leaseback
Sellyourprimaryhomeandleaseitbackfromthenewbuyers
Benefits:
Buyershavea60-daywindowtomovein -(Iftheyhaveamortgage)
Youhaveyourcashandbecomeacashbuyer
Combinealeasebackwithalongclosingandprovideyourself ampletimetoshopforyournextproperty
“HouseSwap”
Internalmatch-makingtoswaportradehomes.
Moveupbuyersanddownsizersbothfeelstuck.
Findoutbeforeyourlist–Callyourrealtor
Forexample,ifyouwantbothabiggerhomeandtomoveoutof thecity,youcanbepairedwithanothersellerwhoislookingto bothdownsizeandmoveintothecity.Tellyourrealtoryou’reready.
Benefits
You’renever“homeless”
Timingispredetermined Noopenhouses
RetirementAssetscanbeconsideredasincome
MortgageLendersallowforassetstobeusedasincomeonce retiredorofretirementage.
Benefits
$1Millioninretirementisequivalentof$50,00ayearincome
Minimumdownpaymentsofaslittleas5%
Qualifyingforasecondmortgagebeforeselling Buybeforeyousell. Canbecombinedwithotherincomestreams.
TheArt
“TooMuchStuff”
ProfessionalOrganizingandMovingCompanies. Therearemanycompaniesouttherethatwillhelporganizeyourbelongingsandsell unwanteditems.
Sellingyourhomeatapremiummakestheseservicesmoreaffordableforyou.
TaxConsiderations
Buyingandsellingcomeswithtaxconsiderations. Findoutinadvance.Don’twaittofindout.
Downsizing Strategies
Thereisno“Perfect”
Waitingfortheperfecttimecanbeacurse. Timeisnotalwaysourfriend. Gettingoutaheadofissuescanbethebeststrategyinthelongrun.
TheArt
Short-TermRental
MoveyourbelongingsintostorageandrentacondowithaflexibleleaseoranAirbnb.
Moveinwithfamilyorfriendstemporarilywhileyourbelongingsareinstorageand searchforahome
GiftofEquity
Ifyou’relookingtokeepthehomeinthefamily,youcangivean“giftofequity”toa familymember.
Helpingfamilywhilestillcontrollingthetimingofatransaction.
Ready,Set,Go
Themarketiscompetitiveanddesirablehomessellquickly.
Waitinguntiltheperfecthomeislistedmaybetoolateorjustmorestressfulthen needed.
Actinadvancetobeaswellleveragedaspossible.
Downsizing Strategies
FinalThoughts
FinalThoughts
●-AcompetitivemarketisaSellersMarket.
●-Capitalizeonthescarcityofinventory.
●-Leveragewhatyouhave.
●-Thegoalistoavoidbeinghomelessand"Subjecttothesale.”
●-Combinemultiplestrategiestomaximizeyouroffer.
●-Inahigh-rateenvironmentcashisking
●-Thedemographicswillshiftandsowillthemarket.