Real Estate Downsizing Steps

Real estate downsizing is not an easy decision to make. However it is a prudent and practical decision that many are choosing to make. There may be different aspirations and drivers behind each individual, couple or family choosing to downsize. But nonetheless, downsizing is fast catching up with retiring baby boomers in Canada.

In order to cater to the real estate needs of aging Canadians, REALTORS^® can get qualified with a Seniors Real Estate Specialist^® designation.  The SRES^® designation is awarded only to REALTORS^® who have successfully completed a series of educational courses on how to help seniors and their families with real estate transactions. Amit Kalia, Broker, SRES^® is fully qualified to assist seniors with their downsizing needs.

Proper Planning for a Worry Free Real Estate Downsizing

Real estate downsizing is fast becoming one of the top priority for baby boomers, and even for people in their early 50s. Almost everyone would like to plan for a life without having to worry about everyday living  expenses like, groceries, utilities, travel. entertaining etc.

Speaking with a financial advisor while planning for a retired life will be a good idea. Being a Realtor, I often talk with my clients and enable them to make the right choices around real estate downsizing. Real estate downsizing is the way to go as it allows one to look at reduced fixed monthly costs like lower mortgage or rent, lower utility bills and smaller maintenance costs. What they save on account of these can provide them with a more relaxed mindset or lifestyle. For some, extra savings can relate into more entertaining or travelling. Of course it also provides them with a reserve or emergency fund that they can dip into for any medical issues not covered by OHIP.

Is Downsizing Right for You? It starts with Finding out Your Home’s Worth.

Our team can provide you with a free home evaluation along with recent comparable sold data from your street and neighbourhood.

Next step is to figure out how much profit you can make from the sale of your home. An important point to bear in mind is that any money you get as profit from the sale of your primary residence is not taxable. However, you need to pay off any mortgage and of course fees associated with the sale of your home. Plus, you may want to budget the cost of new home buying.

• Listing Brokerage fee, Buyer Brokerage fee. Typically, these two amount to 4% to 5% of the home sale value + HST.
• Lawyer/ legal fee for closing the home sale. Say $1,500 one time cost.
• Miscellaneous costs, like packing, moving etc. Say $2,000 one time cost.
• Budget the buying price of a typical 2 BR condo apartment in Mississauga or a bungalow in Mississauga
• Land Transfer Tax on new property.

The amount left after selling and buying expenses is your cash in hand. Consulting a qualified financial advisor on how to save this cash for retirement saving is highly recommended.

Where will you live is the next big question?

Whether you have spare cash or not from the sale of your primary residence, you do need a place to live as well. That’s why buying or renting a place  to live becomes a necessity.

Here are some housing options to consider for baby boomers who are downsizing:

When You Consider Aging in Place, Buying or Renting Your Next Home Becomes an Important Decision

Your next home will depend on your needs, budget, and willingness to invest again in real estate. One option is to sell your current home and buy a condo, semi-detached home, townhome, or even a vacation home in cottage country. By moving from a larger detached home to a condo or a smaller home, you may be able to save on your monthly expenses.

In our experience, more and more baby boomers in Mississauga and surrounding areas, along with those nearing retirement, are choosing condos at Square One in Mississauga. Central Erin Mills is also quite popular these days.

With upcoming Mississauga condo projects and revitalized transit, including the Hurontario LRT, City Centre will remain a top choice for downsizers and first-time buyers.

If you were to downsize from a home to a condo in downtown Mississauga, this is what your costs might look like:

• Monthly property tax on a $400,000 property for the year 2017 is approximately $250 per month.
• Monthly condo fees of approximately $0.60 per square foot. For a 1,000 sq. ft. condo, this cost can be around $600 per month.
• Hydro costs depend on usage. You can budget approximately $80 per month for condo apartments in Mississauga.
• Cable and internet can add another $80 per month to your monthly budget. Some Mississauga buildings offer free cable TV.

Don’t forget, if you need to spend money on new furniture or furnishings, you should budget for that as well.

Your Second Option Is to Rent a Condo Apartment Instead of Buying

As a renter, you are generally responsible for paying one monthly rent amount, as opposed to a mortgage plus condo fees if you were to buy a condo.

As a condo renter, you will likely pay approximately $2,000 per month to rent a 2BR condo apartment in Mississauga. In addition, you would also pay for hydro, internet, and cable TV. We have also seen that many people today do not even subscribe to cable TV, instead, they stream their favourite shows on YouTube and other platforms.

Again, since you are moving from a home to a condo, you may have to spend money on new furniture and furnishings.

At the end of the day, by selling your home and moving into a condo, you can save money and enjoy a more hassle-free lifestyle. The lump sum savings will depend on how much equity you had in the home to begin with and how much you are going to invest again in buying a condo. If your home was fully paid off, your net savings can be significant. If it was partially paid off, your monthly mortgage on a smaller condo will likely be much lower.

Besides, you may also save on utility bills and maintenance. These few hundred dollars per month can quickly add up and help fund travel or other activities you want to enjoy during retirement.

The value of a simpler, hassle-free lifestyle cannot be overstated. As empty nesters, you should have the freedom to do what you want. Why not reduce your liabilities or use your assets to provide you with greater peace of mind?

Call your financial advisor today. For real estate consultation, we are just a phone call away at 905-339-5111.

Downsizing Checklist: Things to Do Before You Move

1. Make a list of the items you truly love and simply cannot live without. This will help you identify what is most important and make it easier to let go of things you no longer need.
2. Start reviewing, sorting, and reducing your belongings at least three to six months before your move. Downsizing is much easier when done gradually.
3. Obtain floor plans and room measurements for your new home so you can determine which pieces of furniture will fit comfortably and where they will go.
4. Be selective about what you keep. If an item has little practical use or sentimental value, consider letting it go. When downsizing, less is often more.
5. Before throwing items away, consider whether they can be recycled, donated, gifted, sold, or repurposed.
6. Stay organized by creating clearly labelled categories such as Keep, Sell, and Donate. Avoid overloading boxes and bins, as they will eventually need to be moved.
7. If you are struggling to decide whether to keep or part with an item, ask a trusted friend or family member for an objective opinion.
8. When selling household items, online marketplaces such as Kijiji can be very effective. For smaller items, garage sales and community marketplace groups may also work well.
9. Use the floor plan of your new home to create a furniture layout before moving day. This can save considerable time and effort during the move and help avoid unnecessary stress.
10. When packing, consider colour-coding your boxes by room. This helps movers place boxes in the correct locations and makes unpacking and organizing your new home much easier.