How to Downsize Your Home - at a Profit

Dear Friends & Colleagues,

Done correctly, downsizing your home can be a smart financial move. Follow these tips to downsize at a profit and maximize your financial gain:

Strategically Time the Sale

? Research market conditions: Sell during a seller's market when demand is high and inventory is low. This typically results in higher selling prices.

? Seasonal timing: Home sales often peak in spring and summer. Consider listing your home during those busy buying seasons.

? Watch interest rates: If rates are low, more buyers can afford a higher-priced home, which can work to your advantage.

? Consult with a real estate professional For knowledgeable insights about these three issues.

Enhance Your House’s Value

? Minor renovations: Small updates (e.g., fresh paint, new fixtures, or upgraded hardware) can boost a home’s value without requiring a significant investment.

? Kitchen and bathroom upgrades: If your budget permits, minor remodeling of the kitchen or bathrooms often offers the highest return on investment.

? Curb appeal: First impressions matter. Spruce up landscaping, repaint the front door, and make sure your home’s exterior is in good condition.

? Consult with an Engel & V?lkers advisor to determine what will maximize the ROI for your property.

Downsize to a More Affordable Home

? Choose a smaller, less expensive home: To maximize your savings, buy a smaller property in a less-affluent neighborhood or region when buying your next home.

? Invest in a condo or townhome. These are often more affordable and easier to maintain than larger single-family homes. They can also have lower property taxes and upkeep costs.

Leverage Tax Advantages

? Capital gains exclusion: If you’ve lived in your home for at least two of the last five years, you may exclude up to a certain amount (varying by state) in capital gains if single or married when selling your home.

? Retirement community tax breaks: Some areas or communities offer tax incentives for those downsizing or moving into age-restricted communities.

Declutter and Sell Excess Possessions

? Sell unneeded furniture and items: Downsizing often means letting go of larger or extra furniture and belongings. Host a garage sale, sell online (e.g., Craigslist, Facebook Marketplace), or work with a consignment shop. Profits from these sales can offset moving expenses. Senior citizens should be vigilant about their personal and financial safety when engaging in such sales.

? Consign or donate: Higher-end items can be sold through consignment stores while donating can offer a tax deduction for charitable contributions.

Choose the Right Location

? Relocate to a less-expensive area: Consider moving to a location with lower living costs, property taxes, or housing prices. This could be a nearby town, a different state, or even an area with favorable retirement benefits.

? Look for growing markets: If you're buying in a growing area with increasing property values, your next home can appreciate over time, adding additional profit.

Minimize moving costs

? Shop for moving deals: Compare quotes from various companies and schedule your move during off-peak times (mid-month or weekdays) for lower rates.

? Downsize before you move: Reducing the number of items you move can lower moving costs, especially for long-distance relocations. The fewer items you take, the cheaper your move will be.

? DIY moving: If feasible, rent a moving truck and move yourself with the help of family or friends to save on professional movers.

Consider long-term financial strategies.

? Rent instead of buy: If you're unsure about your next step, renting may offer flexibility while allowing you to invest the profits from your home sale.

? Invest the equity: After downsizing, and with guidance from a financial advisor, consider investing some of the equity from your home sale into income-generating assets (e.g., stocks, bonds, or rental property) to grow your wealth.

Plan for your future lifestyle and needs.

? Low maintenance: Opt for a home requiring less maintenance and lower utility bills, saving you on long-term expenses.

? Accessibility: If you're downsizing for retirement, choose a home that will suit your future needs, such as single-level living or easy access to healthcare and services.

By focusing on the right strategies and timing, with guidance from an Engel & V?lkers advisor, you can downsize your home while generating a significant profit and preparing for a future with greater financial flexibility.

Please feel free to contact me with questions.

Kind regards,

Tina Lucarelli - Global Real Estate Advisor - Engel & Volkers

310-738-8089

DRE# 02102354