With the Government considering incentives for downsizing, what do you do next?
Depending on your risk profile, selling your home can be one of the scariest events in your life. There are certainly few financial decisions that you make that are quite as big or intimidating.
With talk that the Federal Government is considering offering financial incentives, like allowing downsizers to quarantine up to $250,000 from the asset test after selling their family home, it is a topic we have been discussing a lot lately, and has clearly struck a chord with our members.
If you have decided that downsizing is the right move for you and won’t adversely affect your Age Pension, what do you do next?
Here are four things you need to consider before listing your property for sale.
Buy first? Sell first?
Ideally, most people like to buy their new house and sell their old one as close together as possible, but this isn’t always the case and you don’t want to rush the decision on where you are planning to live for the rest of your life, or be forced to accept a low price for your current property, so you need to work out which decision is right for you.
Once you decide to list your property, you can make sure you leave a long settlement date, giving you plenty of time to find your next home, which can ease some of the pressure.
Of course, you may have arrived at your decision to downsize simply because you have found the perfect property and if that is the case you will just have to buy first and try to negotiate as long a settlement as you can to get your own affairs in order with regard to selling.
If you are unsure what your priority should be, you should ideally sell first. It gives you a solid base of knowing exactly how much money you have to work with when buying your next property and allows you to budget for exactly how much equity you want to put away for future lifestyle expenses.
The major risk is that you may have to move twice (either in with family and friends or to short-term rental accommodation) if you can’t find somewhere to buy in time. If you do encounter this scenario, there are storage companies that offer moving pods. You pack up all your furniture and non-essentials into one pod, which is taken and stored off site, then, when you move into your new property, the pod is delivered to the new location ready to unpack into your new home.
Finding the right agent
Far too many people fall into the trap of shopping around for real estate agents and then settling on the one that offers to achieve the highest selling price or offers the lowest commissions. This is no guarantee of getting the best agent.
Remember that agents will often inflate the expected price to nail down your business and you can be left bitterly disappointed at the end of the process. If you want to get a gauge on what your property is worth, seek out an independent evaluation.
What you want to do is get an idea of who is the best real estate agent in your area. Speak to people you know locally who have sold recently and find out about their experiences.
You will also want to compare sales results of similar properties in your area and find out which agents got the best sales results for those properties.
You should really have decided on which agent you want to use to sell your property before you start shopping around. That isn’t to say you don’t have to shop around. You should still have between three to five agents looking at your property and providing quotes for their commission fees and marketing expenses. But if the agent you want is charging higher fees, you should be able to negotiate a much better deal.
Fixing your home
Before the photographer arrives at your property, you need to make sure your home is looking immaculate. You don’t need to undertake extensive renovations, which risk overcapitalising your sale, but fix every problem as first impressions on real estate websites are extremely important.
All the cracks in the walls need to be patched up and painted over, all the kitchen and bathroom grouting needs to be clean, the garden needs to be completely free of weeds and looking in top shape.
It is often a good idea to invite a friend over to tell you what needs work as sometimes you will be missing the things you have just become accustomed to over time.
It is also important to declutter your home and this can also save you time when packing to move to your new home.
If some of your furniture is looking shabby you may want to consider moving it into storage and using staged furniture, which can make your property look beautiful in professional photography.
Set a marketing budget
With the housing market booming, it just seems as though you have to list your property and the record high prices will take care of themselves. This may be true in some areas, but in most cases you will need to decide on a clever marketing strategy for your property, then decide if you can afford it.
Real estate agents will present you with a range of options, from the very basic and inexpensive to the more elaborate and more expensive.
If your home is most likely going to bought by a young family, there is little point in advertising in the local paper, with most people in that demographic doing all of their searching online.
If your home is likely to attract the interest of investors, it may be worth paying for a premium package on some of the real estate web sites to make sure that it is noticed.
It is important to resist the temptation to scrimp on marketing costs as getting as many people interested in your property as possible is the key to driving up the sale price.
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