Are you thinking of downsizing? Should you sell or buy first?
If you found this post on a blog, it means you were probably looking for the “how to in downsizing” and you are not alone. While an emphatic answer may not apply to everyone, it is best to know as much as possible about the factors that lead to the RIGHT decision. We’ll help you with that.
FIND AND UNDERSTAND YOUR RISK TOLERANCE
Given the uncertainty, how far can you go? The real estate market is always uncertain and testing the waters can be nerve racking or an immobilising thought! If you take the opportunity, the purchase of a new property might suit you to do first. If you’re careful, the first sale can save you. This scenario always requires research, careful planning and consideration.
However, there are some markets that you definitely can and some you can’t.
The uncertainty in the real estate market determines a key element of your decision: money. Usual scenario: Most people will use the proceeds from the sale of their property to buy a new home. If you agree to or reduce the amount, you will likely set aside a portion of that amount for your other needs. What if you buy too early? What if you sell late? It’s getting that delta and crossover done with exquisite timekeeping that is the key.
Always remember that whether you want to buy or sell first, it is the risk that causes the dilemma. On the one hand, real estate market conditions have an impact on real estate prices. So the final question is: who should I seek advice from? I recommend talking to your financial planner and getting a good overview of the market with your buyers.
THINK ABOUT SUPPLY AND DEMAND
In fact, three factors are at play: your desire for moving to and around certain areas, the availability of housing in your target area, and the search for housing in your current and your target area.
First, why are you planning to move? Why do you want to change the size? Your answers to these questions will help you understand the urgency of making a decision.
Second, what do you know about the current housing availability in your destination? When you consider a retirement village, you probably don’t have to worry about the place. However, if you are moving to live closer to your family or to your dream location, knowing the market will help you make an informed decision. If you have a lot of stock to choose from in your price range, you can sell your house first. When the availability in your destination is short, you need to buy first. Don’t get stuck selling and then having nowhere to live!
Third, the housing demand in your current area determines how fast you can sell your home. You can then sell and then buy, or vice versa. The demand remains. However, if the demand for homes in your destination is high and you’re ok at the other end, buy them first.
Think about goals, supply, and demand. These factors are of equal importance. A house is a necessity and you cannot afford to rent it because it is in addition to your expenses financially and emotionally!
At this point, you may already have a good idea of what to do next. However, before finalising your decision, you should also understand the pros and cons of buying before you sell and selling before you buy. We’ll cover this in our next blog post.
Shifting Your Mindset – Understanding The RIGHT TIME, Moving Roadblocks, And How To Be READY For Your DOWNSIZE.
This online course for empty nesters is designed as the first step of a 3-part program focusing on improving your mindset and can be completed independently or as a pre-requisite to Part 2 and Part 3 for the full ‘Rightsize Your Home’ program.
Rightsize Your Home Online Course Part 1: Shifting Your Mindset will help you understand where you are currently at and help you move through any overwhelming thoughts that may be stopping you from moving forward. Also, you will begin to plan and feel more excited about your next chapter!
We invite you to try this online course, click below now.