Why do people downsize?
Downsizing comes at a time in your life when the kids have moved out, and you've decided whether for financial reasons, or lifestyle reasons that the time has come to find something a little smaller.
Perhaps your house is getting too big and you're finding you're not utilising all the rooms or you're not enjoying keeping the dust off unused bedroom suites; perhaps you want to move closer to the beach so you can drop a line whenever you want; whatever the reason, there's a few things you should consider.
What are you trying to achieve?
Speak to an active agent about how the market is going, are prices still strong, are the buyers actively looking and making offers. What can you do to prepare your home to help get the best price possible?
Where are you going to move to?
Have an idea as to what area you're looking to move to, do you want to stay local, are you moving up the coast?
What sort of property are you looking to buy?
A small house, or a unit on the coast.
Whatever the goal, you probably wont find “the perfect place” so you may need to compromise on something – I have a little trick to help you with that – get in touch.
Focus on the big things, suburb, number of bedrooms, bathrooms, car parks. Things you can't change are usually the things you won't want to compromise on. Changing flooring, painting, appliances should be on the lower end of your wants.
How much would it cost?
Look at the cost of the property you're wanting to buy. How are you going to pay for it? Will you require some form of finance (bridging loan), would you purchase subject to sale, or would you tap into your superannuation?
Keep in mind that you may over or under achieve your desired sale price, have a plan for the pessimistic and the optimistic result. Too often people have the sell for $X, because they need to buy and that's how much it costs.
What timeline are you working with?
Don't set this in stone. Be somewhat flexible. Things do come up that may put your timeline out, social engagements and health issues are two things that can put a block on dates. Plan ahead, when do you want to be in your new property, what are the steps to get there, and how do we achieve them.
- Giving away unwanted items of value
- Selling unwanted items of value
- Cleaning out those places that you just never get to
Be aware of the government incentives
From 1 July 2018, people aged 65 and over are able to make a non-concessional (or after-tax) contribution of up to $300,000 into their super from the proceeds of selling their home. You won't need to satisfy the existing voluntary contributions rules, and you won't need to worry about the restrictions on non-concessional contributions for people with balances above $1.6 million. You can also still make other voluntary contributions under the existing contribution rules and concessional and non-concessional caps.
If you're downsizing, start deciding a pecking order of everything (eg. furniture, tools, cars, etc) that you're willing to part with, 5 bedrooms doesn't fit into 3, so you will likely need to make some adjustments.