Downsizing: When The Time Comes To Move Into A Smaller Home

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Are you considering downsizing from your home and moving into something more small and manageable?  What are the circumstances behind that consideration?  Becoming an empty nester is one of the many things that lead homeowners to want to downsize.  Is maintenance becoming too much to handle and you would rather let someone else handle all that?  No matter what the reason, countless Americans each year are making the commitment to sell their existing home and move into something smaller.

But a lot of people are also having a hard time actually implementing that commitment. What are some of the reasons to expedite this life-changing event?  You will not only save money on tax payments, but your utility bills will be more manageable and mortgage payments smaller. And in cases where homeowners will be moving to a condominium or cooperative, there will be a lot more time and energy once you have freed up the need to maintain your property.

Here are some of the ways you can get stuck in the process and how you can manage each situation. Once all is said and done, you will finally be able to focus on the more important things in life!

Not Knowing Where Or How You Will Go

For many homeowners the sheer idea of having to move from their home elicits fear and uncertainty. If you live in an area where there may not be a lot of options for downsizers, what are you to do to find a smaller place?  Usually people moving from a larger home into a smaller one have a lot of stuff to deal with before the move.

The solution is to meet with a Realtor that will prepare a list of properties ideal for your situation. Whether it is a condo with extra storage or a community designed to accommodate certain age groups – your Realtor can steer you to suitable properties in your desired location.

Unsure About How Much You Can Spend On a Downsize

In most cases when a homeowner makes the decision to downsize they will utilize the equity in their existing home to purchase the new property. But if you have lived in the home for ten, twenty, thirty or even longer than that – chances are you have little idea of what you can actually afford. This can also impact your decision of where you want to move.

Contact your real estate agent for a customized assessment (also called a CMA) of what you will likely be able to sell your home for in today’s market. Once you know what you can expect, looking at other homes in the area that recently sold, you will have a better idea of what you can afford.

Accepting That You Will Need to Reduce Your Stuff

This is the hardest step for most people making the decision to move to a smaller home. After living in one home for years and years, there is a lot of stuff to deal with that must be managed. Some items will of course be of sentimental value, others are things you just can’t bring yourself to get rid of and still other things might be items of another family member that has moved away.

The best way to deal with this situation is to make the commitment to downsize and then undergo a cleanup operation. Either you can hire a professional organizer or set up four categories and organize your things by the labels “Keep”, “Donate”, “Sell” and “Trash”. Your real estate agent can put you in touch with various professionals to help you manage this undertaking whether through estate sales, auctions, donation centers or other avenues.
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For help with these or anything else related to your real estate and home life goals, contact me today!

With Market and Interest Rates Down – Does That Mean Property Investment Is a Good Idea?

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So many people are wondering these days whether it is a good time to invest in property.  It’s no secret that interest rates are at an all-time historic low and when combined with the low housing prices we are still seeing these days, more and more people are considering real estate investment.

How can you tell if it is the right thing for you?  And if you do decide you want to venture into buying property for the sake of investment, how do you go about it and what type of dwelling makes the most sense? 

The answer is largely dependent on your individual investment goals.

Overall Appreciation Perfect for Long-Term Security
The easiest way to enjoy significant returns on investment is through the purchase of a single-family home.  Historically more popular, these properties are easier to rent out, entail less day-to-day management and they can be assumed as primary residence at any given time the investor would so choose, providing an added sense of security.  Home values do appreciate with time and single-family homes typically rise in value faster than other rental property types.

It is important that the property is located in a desirable location and also that it is easily rentable.  Your Realtor can assist you with an analysis of the area’s statistics in term of rent versus buy situations as well as a look at what other similar properties are renting out for.

Slow and Steady Monthly Income
Rental units that comprise of anywhere from 2 to 12 (or more) family units within the property are perfect for monthly real-time cash flow. While they may not appreciate as much as single-family homes, they provide the comfort and safety net of steady monthly income.  If increased cash flow is the goal then opting for multi-unit rental properties may be the best route to take.

Demographics play a key role in determining your investment.  For instance, if you live in a college town then a rental home near the college or downtown would be ideal for many senior or grad level students that prefer easy access yet quality housing.  Conversely, resort homes are also attractive and as long as they are located near some tourist attractions you may be able to yield decent rental income. Rental units in big cities are also popular in the more bustling areas of town.

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Given the increase of rental units and investment properties being rented out, there has been an influx of property management companies set up.  Ideal for the silent investor or someone that does not have a lot of time to put into the actual management of properties, property management companies handle anything from market analysis, finding and screening tenants plus managing the move-in process to handling day-to-day affairs like collecting rent or property maintenance.

If you can afford it and have investment goals that line up with some of the returns that are apparent with property investment, contact your Realtor to get a feel for what is available out there.  This is definitely a very interesting time to pursue an investment property.

What’s a Real Estate “Short Sale” and Why Should I Buy One?

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The best way to explain a short sale is with an example:

Assume a homeowner has an unpaid loan mortgage balance of $200,000, but the property will sell for only $175,000. The lender holding the mortgage agrees to sell the house for the $175,000 amount, which, of course, leaves it “short” of the full amount of $200,000. Thus, the name “short sale!”

Obviously, lenders don’t like short sales since they’re not in business to lose money. But such situations do occur for various reasons often related to “hardship” situations. Examples include:

• Permanent injuries
• Financial insolvency
• Job layoffs, etc.

This is a sad situation for the homeowner, but it does offer an opportunity for you to pick up a bargain. However, there are several potential downsides you should be aware of before you make an offer.

Pitfall 1: Allow time for the lender’s decision.
Once your offer is accepted by the seller, the contract will be sent to the seller’s lender for approval. This process can take anywhere from 2 to 12 months, and there’s oftentimes no way to know beforehand exactly how long the lender will take.

Pitfall 2: The lender is under no obligation to accept the short sale.
Often times, lenders will come back with a counter of a higher price, or will sometimes reject the offer outright. There is no way to know beforehand exactly what the lender is thinking. This risk can be reduced by pre-qualifying the seller and making sure he or she has a genuine hardship, and by making sure you offer close to market value.

Pitfall 3: The seller must be committed to the process.
A great deal of paperwork and commitment will be required of the seller. There have been cases where the seller does not complete everything that is necessary and causes the lender to reject the deal. Additionally, there have been cases where the seller backs out to declare bankruptcy. Make sure the seller is committed to the process before you begin!

Summary

You can pick up great bargains in the short sale market, but you have to be very knowledgeable and very patient! And, as mentioned earlier, there are risks and often times you will face disappointment. Hiring a professional realtor who has experience with the ins and outs of short sales can help reduce these risks.