Art of Downsizing Blanchard Presentation

The Art of Downsizing

-Initial Thoughts -The Demographics -The Data -Strategies -Final Thoughts

Why Downsize ●

Typically, people look to downsize near retirement age.

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Makes life easier and spend less money.

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Live someplace more convenient, with specific amenities, closer to family or other focal points.

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Minimizing financial overhead – taxes, insurances, maintenance, upkeep.

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Simplifying life - less maintenance and work.

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Freeing up home equity for other uses.

Why Downsize

The Downsizing Conversation ●

I’d love to sell.

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Why don’t you?

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Rates are too high.

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Do you need a mortgage? If you do…will the higher rate even matter?

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The market is too competitive.

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That’s an advantage to a seller like you, and you’ll be a very strong buyer. ○ Do you think it’s going to get less competitive?

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I’d have to sell my house first ○ I don’t want to be homeless.

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What if you could buy your next house without having to sell first?

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There’s no place to go.

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Where do you want to go? ○ If you found what you wanted – are you ready?

The Demographics

33-year old in 2006 (born in 1973)

Silent Total Births 47M

Baby Boomers 76M

Generation X 55M

Millennial 66M

Post-Millennial 61M

33-year old in 2023 (born in 1990)

Silent Total Births 47M

Baby Boomers 76M

Generation X 55M

Millennial 66M

Post-Millennial 61M

The Data

Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.

Essex County – Market Action Index -Is it a buyer’s or seller’s market?

-Is the market hot?

-How do we use data to prove this?

-Market Action Index- for an at-a-glance measurement of market conditions.

-A barometer of real estate supply and demand.

-It shows whether it's a Buyer's or Seller's market.

-30 is a neutral market - one buyer per seller.

-A value above 30 indicates demand is relatively robust, which is referred to as a Seller's Market.

-Below 30 is a Buyer's Market.

-Uses all the major indexes to determine market competitiveness.

Essex County Data

Downsizing Strategies

Leveraging Investments/Retirement 60 Day Rollover Take money out of the qualified plan or IRA and use to purchase a new home. Sell existing home and complete the rollover with funds from sale of current home.

Benefits: No closing costs No underwriting No taxation within 60-day window CASH BUYER

#1 Leveraging Your Assets Rollover

Leveraging Investments/Retirement Non-Qualified Account Margin Loan Benefits: No closing costs No underwriting No taxation Pay market rate on loans You’re borrowing your own money up to 50% of account value.

Does have variable interest rate tied to prime Could have a margin call

#2 Leveraging Your Assets Margin Loan

Leveraging Investments/Retirement 401k Loan Benefits: Little to no “closing costs” No underwriting No taxation as long as loan is paid back with 5 years *depending on plan Interest on loan is paid to yourself Limited to $50k or 50% of balance, whichever is lower

#3 Leveraging Your Assets 401k Loan

Leveraging Your Current Property HELOC Benefits: Positioned ahead of time to write a check against your current property Don’t need large investments/cash assets HELOC’s are not paid back until you use them CASH BUYER

#4 Leveraging Your Primary Residence HELOC

Leveraging Your Current Property Cash Out Refinance Benefits: Positioned ahead of time to write a check against your current property 80% of home value can be utilized Maximize your cash capabilities Don’t need large investments/cash assets CASH BUYER

#5 Leveraging Your Primary Residence Cash Out Refinance

Delayed Closing Sell your Primary Residence but wait to close Agree to terms with buyers while you shop for the next property Benefits: Sellers drive the transaction Buyer waits until the seller is ready Allows time to shop for the next home

#6 Leveraging Your Primary Residence Delayed Closing

Leaseback Sell your primary home and lease it back from the new buyers Benefits: Buyers have a 60-day window to move in -(If they have a mortgage) You have your cash and become a cash buyer Combine a lease back with a long closing and provide yourself ample time to shop for your next property

#7 Leveraging Your Primary Residence Leaseback

“House Swap” Internal match-making to swap or trade homes.

Move up buyers and downsizers both feel stuck.

Find out before your list – Call your realtor For example, if you want both a bigger home and to move out of the city, you can be paired with another seller who is looking to both downsize and move into the city. Tell your realtor you’re ready.

Benefits You’re never “homeless” Timing is predetermined No open houses

#8 Leveraging Your Primary Residence House Swap

Assets as Income Retirement Assets can be considered as income Mortgage Lenders allow for assets to be used as income once retired or of retirement age.

Benefits $1 Million in retirement is equivalent of $50,00 a year income Minimum down payments of as little as 5% Qualifying for a second mortgage before selling Buy before you sell.

Can be combined with other income streams.

#9 Leveraging Your Assets as Income

The Art “Too Much Stuff” Professional Organizing and Moving Companies.

There are many companies out there that will help organize your belongings and sell unwanted items.

Selling your home at a premium makes these services more affordable for you.

Tax Considerations Buying and selling comes with tax considerations.

Find out in advance. Don’t wait to find out.

There is no “Perfect” Waiting for the perfect time can be a curse.

Time is not always our friend.

Getting out ahead of issues can be the best strategy in the long run.

Downsizing Strategies

The Art Short-Term Rental Move your belongings into storage and rent a condo with a flexible lease or an Airbnb.

Move in with family or friends temporarily while your belongings are in storage and search for a home

Gift of Equity If you’re looking to keep the home in the family, you can give an “gift of equity” to a family member.

Helping family while still controlling the timing of a transaction.

Ready, Set, Go The market is competitive and desirable homes sell quickly.

Waiting until the perfect home is listed may be too late or just more stressful then needed.

Act in advance to be as well leveraged as possible.

Downsizing Strategies

Final Thoughts

Final Thoughts ●

-A competitive market is a Sellers Market.

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-Capitalize on the scarcity of inventory.

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-Leverage what you have.

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-The goal is to avoid being homeless and "Subject to the sale.”

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-Combine multiple strategies to maximize your offer.

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-In a high-rate environment cash is king

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-The demographics will shift and so will the market.

Thank you