TMTM

stevecoleimages/istockphoto

Cheapism is editorially independent. We may earn a commission if you buy through links on our site.
stevecoleimages/istockphoto

Small Spaces, Big Choices

Downsizing can be an exhilarating process that leaves you with more financial freedom and fewer pesky household chores. But as with any major life decision, there are plenty of pitfalls besides having to get rid of unneeded stuff that can make it more stressful than liberating. Here's some food for thought if you'll be streamlining your life in the near future.


Related: 12 Alternatives to Traditional Retirement Communities

Johnce/istockphoto

Underestimating the Cost of Selling

It might be easy for homeowners who've been out of the real-estate game for years to underestimate how costly it can be to sell. Agent commissions are obvious, but Beatrice de Jong, consumer trends expert for Opendoor, says other outlays aren't. "Some other fees sellers may not consider include: the costs of having the home professionally deep cleaned; professional staging to make the home look its best for listing photos and marketing; paying a photographer; having a professional gardener or landscaper give the yard an overhaul; and touching up paint and making minor repairs to get the home into marketable condition." 


Related: 21 Ways to Make Your House Sell Faster

sturti/istockphoto

Accepting a Low-Ball Offer

Many retirees are in the enviable position of selling homes that are paid off, but that doesn't mean they should leave money on the table, says Brandon Renfro, financial adviser and assistant professor of finance at East Texas Baptist University. "Be careful not to get in a hurry and give too much of your home equity away. Even though that home equity is tied up in your home, it is still value that belongs to you and gives you retirement flexibility," he cautions. Broker Liz Brown says working with a trusted local lender can be key to understanding the financial stakes involved in your decision. "You want someone that you can have a conversation with and they will point you in the right direction that makes the most sense for you."


For more great senior living tips,
please sign up for our free newsletters.

LightFieldStudios/istockphoto

Not Asking Whether Downsizing Makes Sense

One of the most important steps in downsizing is also the most easily skipped: Figuring out whether it's your best move in the first place. There are many cases when staying put still makes sense, says Claudia McLaughlin, founder of CMFTO in Chicago, a firm that helps manage clients' moves, including those of downsizing seniors. "We're seeing many instances where the current real estate market is not giving sellers the return they'd expect on their properties, and most people are happy in their current neighborhood," she says. "In these situations, it makes sense to ask yourself: Is it possible to adjust your current home to meet the needs of your new lifestyle?"


Related: 14 Small Home Projects That Can Help Seniors Age in Place

FG Trade/istockphoto

Not Trying Before You Buy

While you can't move in to a prospective home for a trial period, it's certainly possible to "try out" a neighborhood or a new city, especially if it's different than what you're used to. "If you're thinking about changing environments from suburban or rural to urban, or the other way around, I'd suggest giving it a test drive first, to see if you really like it. Book an extended hotel or Airbnb stay, and try it out," says Miguel A. Suro, a Florida attorney and lifestyle blogger with The Rich Miser. Realtor Ted Karagannis says even day trips can help you confirm you're on the right track. "It's always best to spend time in the neighborhood — the restaurants, movie theater, coffee shop, supermarket — to see if this is the right location for you. Every neighborhood offers a completely different vibe." 


Related: How Much Could You Save by Downsizing in These Cities

patrickheagney/istockphoto

Being Too Quick to Part With Valuables

Sure, a lot of your old stuff won't be worth much, but do a little research to see if there are exceptions. For instance, older "brown wood" furniture doesn't have much of a market, but mid-century furniture is on trend and can fetch a pretty penny, says Megan Mahn Miller, an appraiser and auctioneer in Minneapolis. "When you decide what you are ready to part with, meet with an appraiser or auctioneer to see what might have value. You would be amazed at what collectors are interested in, whether it is old bottles or your kids' 'Star Wars' toys," she says. "Having an expert take a look can raise extra capital for you and your move."


Related: Common Household Things to Sell for Extra Cash

JodiJacobson/istockphoto

Storing Stuff You Don't Need ...

Downsizing can be hard, but if you're tempted to rent a storage unit for things you just can't bear to part with, think twice. Deborah Heiser, an applied developmental psychologist who specializes in mid-life and aging, says it's almost always a waste. "I haven't ever seen anyone go into the storage unit to get anything out. The items aren't missed in the new place, and it costs a lot of money over time." How much it will cost you varies, of course, but you could be shelling out anywhere from $100 to over $300 a month just to hang on to unnecessary items.

jeangill/istockphoto

... Or Forcing It on Those Who Don't Want It

Surely your daughter will want that dusty set of fine china, or your grandson would love your closet full of old Atari games? That's unlikely, Heiser says; more than likely, the only person who views these things as valuable is you. "Individuals feel emotionally connected to their belongings and save them for their grown children who do not want to take the items in," she cautions. "Unless someone has specifically asked for an item, these 'heirlooms' tend to get moved along, stored somewhere, and then never used by anyone again."


Related: 30 Collectibles That Are Now Worthless

bowdenimages/istockphoto

Sorting Everything By Yourself

Why go it alone if you don't have to? "Sorting what to take and not to take into your smaller space can be very emotional," says Noemi Bitterman of Warburg Realty. "Getting rid of mementos is hard as you move forward with a new phase in your life. Plan accordingly and hire a professional organizer to help you sort and decide what stays and what goes." In lieu of calling in a professional, involving willing family members can also help, says Arthur Bretschneider, CEO and founder of Seniorly. "Don't exclude young family members from participating in the downsizing process. For example, if it's a grandparent downsizing, let them put stickers on items they are not going to take with them to their new home, but would be happy if a grandchild would want. ... That transference is incredibly powerful and can reduce the emotional stress of the downsizing process." 


Related: Decluttering Projects You Can Easily Tackle in Less Than 30 Minutes

AndreyPopov/istockphoto

Bringing Furniture That's Too Big

The furniture that filled out your formerly large living room may not fit in the compact confines of a more modest floor plan. Similarly, a formal dining set may serve no purpose when you have no formal dining room. "You really need to plan out what your space can handle and what you want it to feel like," Mahn Miller says. "The old couches may not suit the new space, or may be a painful reminder of your past house." Realtor Rachel Lustbader advises taking measurements early on in the process. "Once you're already aware (of whether your furniture can fit), you can start selling or donating a few pieces instead of moving all your furniture just to find out it won't fit into the new space."

Jelena83/istockphoto

Moving Away From Family

There may be situations where it's unavoidable, but think carefully if downsizing will take you away from cherished friends and family members. "Being far away from family can be hurtful to our mental, emotional, and even physical health," Suro cautions. "That's why it's important to avoid the lure of cheaper housing and amenities in areas where you might be a few hours' drive, or even a flight, away from close family." Better weather may also be a poor substitute for loved ones, Heiser says. "It can be very tempting to move to a warmer location with a smaller monthly payment, but if the family and friends aren't nearby, it can be quite difficult to make the transition."

Sohl/istockphoto

Leaving No Room for Visitors

That little one-bedroom apartment might be temptingly inexpensive, but think twice if you still want to host holiday meals or have room to entertain the grandkids. Suro cautions against "downsizing to the point where it's uncomfortable to host people or entertain. An active social life makes us happy, and usually includes hosting friends and family for overnight visits, or just for dinner parties or other entertainment," he says. On the flip side, it's unlikely that you need another four-bedroom house. "If it's just two people, and the holiday celebrations have moved to the grown children's homes, all you need is an open concept living area with a kitchen," says Martin Eiden of New York's Compass Real Estate. "Likewise, if you have only the occasional grown children and grandchildren visit, two bedrooms should be enough."

fizkes/istockphoto

Not Budgeting for Condo Fees

Condos are justly popular for downsizing retirees who want a few amenities or someone else to take care of the yard. But the perks can get costly. "Stick to a budget and know any costs and fees upfront," de Jong warns. "A condominium home may have costly HOA monthly dues or special assessment fees for renovations to the complex." And be sure to consider whether amenities like a gym or pool are ones you'll actually use, she says. It might be that space for a garden or a crafting room is more important to you, and you'll end up paying hefty fees for things you don't use.


Related: 12 Things You Should Know Before Buying a Condo

PeopleImages/istockphoto

Forgetting About Taxes

If downsizing is taking you to another state, "check the annual real estate taxes," Bitterman says. "These differ from state to state and if saving money is your priority, this is an important factor to consider." And if you're lucky enough to have lived in a place for a long time where home values have really skyrocketed, investigate whether capital gains taxes will be an issue when you sell. "In Manhattan, homes that were purchased many years ago often have increased in value by several hundred percent," Lustbader cautions. "A sale at this time would trigger a significant capital gains tax and make it more cost-efficient to stay put rather than downsize."


Related: Most and Least Tax-Friendly States for Retirees

eyenigelen/istockphoto

Ignoring Whether You Can Age in Place ...

Downsizing can be liberating, but think carefully about whether you want this move to be your last. Many seniors are rejecting retirement communities and, later on, assisted living facilities in favor of aging in place. But will your new place be up to the challenge? "Consider a single-level home," advises Lakelyn Hogan, gerontologist and caregiver advocate at Home Instead Senior Care. "Stairs can cause added challenges to those with balance or mobility issues." She also recommends carefully assessing bathrooms for potentially risky sunken tubs and slippery steps, and thinking about whether grab bars or walk-in showers can work in the space.

SeventyFour/istockphoto

... Or Even Live With Some New Roomies

In this day and age, retirees are getting creative about where they want to spend their golden years. While downsizing remains the most popular option for those with too much space, one alternative that's gaining popularity is home sharing, says Wendi Burkhardt, CEO of Silvernest. Home sharing is "where a homeowner rents out unused space in their homes to compatible, long-term roommates," Burkhardt explains. "You can earn an average of $10,000 a year by simply leveraging your spare rooms. Another benefit is that you split living expenses and chores with someone else." Looking for help with errands or household repairs? You may even be able to find a roomie willing to help out in exchange for discounted rent, she says.

Cecilie_Arcurs/istockphoto

Acting Too Quickly ...

If you're scheduling meetings with real-estate agents only a couple of days after the ink on your child's diploma dries, think about slowing down, advises Trish Tetreault, financial analyst with FitSmallBusiness. "Your house may feel too big," she acknowledges. "However, if your children fall on hard times in their early adulthood, are you willing to allow them to return to the nest? If so, downsizing your home immediately after you hit the empty-nest stage may result in not being able to accommodate their potential return." It's a question that's more relevant than ever – 32 percent of 18- to 34-year-olds live with their parents today, compared with 20 percent in 1960.

kate_sept2004/istockphoto

... Or Waiting Too Long

Experts emphasize that downsizing is a process best begun when you still have the energy to do it, both physically and mentally, and not after things like illness, divorce or the death of a spouse force your hand. "Choose your new home when you can, and not when you have to," Bitterman says. "Many wait until they can no longer climb stairs and do things on their own before they decide to downsize. Start looking and start planning while you are healthy and independent."


Related: 13 Signs That It's Time to Consider Senior Care