By Bruce Nemovitz, SRES, CRS, CSA
Change is hard. Change is uncomfortable. Most of us will pull out all the stops to sustain the status quo even when it is to our benefit to move in another direction. Fear of the unknown is the number one reason for avoiding moving from a home that no longer matches the needs of older clients. Yes, the laundry is in the basement and the yard is the size of a football field. The bathtub is too high for safe entry, and the stairs to the second floor have become the enemy of their knees. Maintaining their home has become an albatross around their neck, and freeing up their home equity could sure make life more interesting.
Professionals advising their older clients on the ins and outs of selling their homes and changing lifestyles might have the following conversation with them.
Look around. Do you see the same home that offered peace and safety when you first purchased it thirty-five years ago, or do you see a dead end with problems and issues on the horizon? Who are you today? Are you the same person who mowed the acre lot with excitement, or are you the one who avoids even thinking about the perpetual maintenance needed to maintain your home? When is the last time you took a hard look at who you are today and what your goals are for the future? Do you want to travel without the worry of a home left vacant? Do you want to be closer to your children and grandchildren? Do you want to live in a one story with no steps and little maintenance? Do you feel safe and secure since your neighbors and friends have moved away?
The “great recession” prevented so many of us from making any changes to our lifestyles and lives. Most of us decided that change was not possible with uncertainty at every turn. The equity in our homes was shrinking and our fear was increasing as the recession wore on. It is understandable that many of us chose to remain in the same situations while our financial future was at risk. The great recession lasted approximately eight years and in that period we changed. We noticed that our desire to be closer to family increased and our wish to be free of the maintenance of a home looked more attractive.
The current real estate market is gaining momentum and offering that chance to change your life and open up opportunities that are right in front of you. Almost every state is reporting rising prices and a greater amount of buyers. It has once again become a seller’s market in most sectors of the country. Therefore, change is finally not only possible but profitable. Your chance to change your lifestyle to match who you are today is finally here! The question now is: “Do I wait for the market to increase my equity and remain in a home that no longer works for me or do I move to a condominium or apartment that matches the life I want to live today?”
Let’s consider for the moment that you choose to take the path that leads to a healthier more fulfilling lifestyle. What would that change look like? How would the process work? Where would you move and how would you prepare your home for sale?
The first step is to choose a housing option that meets all of your current requirements for a lifestyle that offers more mobility with less responsibility. Whether you choose to move closer to your loved ones or want to remain in your same neighborhood is your first consideration.
Location. Location. Location. Where you live is critical to your happiness and security. Take some time to ask yourself what location would provide the greatest happiness and security. Where do you want to wake up each day and how would that new environment add to your current lifestyle?
Next, check out the options. There are more choices available today when looking for affordable housing that caters to the issues we fifty-plus youngsters face. For instance, many areas are moving away from apartment-building style condominiums to side-by side-ranch condominiums. This trend will only grow as boomers (eighty million strong) are downsizing and choosing the carefree lifestyle offered by a one level, maintenance-free condo in a fifty-five and over community.
Senior communities are offering more choices in design and layout to match the boomer lifestyle. New construction of fifty-five and older communities was halted during the recession. With today’s low interest rates and renewed confidence in housing, many developers are listening to the wants and needs of the older community and building to match the lifestyle of today’s boomer buyer.
Now it is time to prepare your home for sale. Today’s millennial buyers, ages twenty-five to thirty-five, are leaving Mom and Dad’s nest and starting their own families. A huge number of buyers are currently in the marketplace. Coupled with this influx of would-be purchasers is a lack of inventory, causing a seller’s market and prices to rise in most areas of the country. Therefore, this is a great opportunity to free up that home equity that could allow you to pursue that new lifestyle you deserve. However, the days of just putting the home on the market without preparation to meet today’s buyer’s standards are over.
The millennial buyer will pay a premium price for the home that is structurally and cosmetically appealing. That means white walls and worn carpeting must go before putting your home on the market. Yes, you can sell in any condition, but why not get a great price for your home by making a few changes that would make it appealing to a young buyer? We used to tell sellers that neutral white or beige is good and color is bad. Today’s buyer wants life to the walls in the form of pastels and accents. Worn and tired flooring will discount the sales price by up to 20 percent. You don’t have to put in a new kitchen or baths, but make sure your home is clean, freshly painted, and de-cluttered.
When discussing moving and downsizing with older clients, the first topic that comes up is what to do with all the stuff. It is hard to envision thinning out the accumulated personal property in a short time. There are companies that will sort, pack, bring in a dumpster, throw away the junk and take other items for donation that the owner has designated and organize an estate sale. In most cases, the cost is just a small fraction of the proceeds from the sale. It’s easier to move first if this is possible. Then the structural and cosmetic upgrades to prepare your home for sale can be done without upsetting your lifestyle.
Debunking the Myths
There are many myths when it comes to preparing a home for sale, and common misconceptions that are repeated in every sector of the country. These “statements of fact” are understandable but do not hold true. Following is a sampling of the most often repeated misconceptions.
1. “That horizontal crack on my basement wall is not a problem. It has been there for years and my basement does not leak.”
Basement issues are the number one problem that will stop a real estate transaction in its tracks. They can cost $1,500-$30,000 on average to so sellers would rather not deal with this issue. There are two major components to the soundness of a basement. One is structural or the integrity of the wall, and the other is the drainage system, which is drain tile related. So you could have a dry basement (drain tile system working) but a wall that has lost integrity by the evidenced horizontal crack with wall movement. They are two separate issues, but both contribute to the proper functioning basement wall and drainage. It is always best to do any repairs necessary relating to basement problems before putting your home on the market!
2. “Why should I replace the carpeting? The new buyer won’t like the color I choose.”
Yes, that’s possible. But a worn, unappealing carpet will lead to a very low offer, if any, and will turn off would-be buyers. Although carpet can be replaced at a relatively low cost, the impression is that the home has been neglected. Another sale is lost. The lesson here is to replace the old carpet, which will give you a great return on your investment.
3. “We can always come down.”
Yes, you can always come down…way down.Pricing a home too high to “test” the market sounds like a good idea. But today’s buyers are smarter and better educated about home values than ever before. The Internet will provide all of the information a new buyer would need to know if your home is overpriced. When a home is priced too high to compete with similar homes in a similar area, the result is few showings and longer market time. The longer a home sits on the market the lower the offers will be, if there ever are any offers. A well-priced home will sell faster and closer to the asking price as buyers will not want to wait knowing it is a good value It’s wise to listen to professionals who will research the market for you.
4. “My neighbor said that we are pricing our home too low.”
Think about it. Who has the biggest stake getting the highest price other than you, the homeowner? Your neighbors are concerned about the value of their home. The more you get from a purchaser, the more their home may be worth. Therefore, neighbors who love their home and neighborhood would also have an emotional investment. They have not researched the market in most cases, and assume what it should sell for with no basis of reality. Once again, listen to the professionals who will establish price based on fact. Location and condition are the leading factors in setting a price for your home
5. “I heard properties are way up.”
No matter how well the real estate market, the natural instinct is to want about 10 percent more than the actual value of your home. Now that the recession is behind us, we are experiencing gains in most areas of the country. However, the gains usually do not match the “hearsay” factor, meaning the price increases are exaggerated by a neighbor, co-worker, or family member. On average, we are seeing about 11 percent gain in real estate prices across the country. But remember, we also witnessed a severe drop in values from 2007-2014. Thankfully, most of the losses have been recovered. But in the end, the condition of your home and location will dictate price increases. The best bet is to have a Senior Real Estate Specialist produce a comprehensive market estimate. Then you will know the true value of your home in real time. My guess is that the price will fall about 10 percent below your neighbor’s estimate.
6. “My tax bill states that I am paying my taxes based on a value of my home, and I expect a buyer to pay the assessed amount on my tax bill.”
Your tax bill establishes value every few years, depending on the community you live in. Therefore, it is not fluid. It does not change every day, so it can’t be accurate and up to the minute. At times it could be close to reality and other times way off. The most important factor for establishing value is to find homes that have just sold with a similar assessment in a similar area, and find out what they sold for. Also remember that the assessor does not take condition into account. Condition can factor up to 50 percent from a low to high, depending on how a property is presented. Once again, a professional Senior Real Estate Agent can offer an accurate assessment of value based on today’s comparables, factoring in the condition of your home when ready to sell.
7. “I need to get $xxxx because I plan on moving to Seattle. Have you seen those prices?”
Nothing more to say about that comment. You already know the answer.
8. “I heard there is no money for buyers. Is that true?”
No. There is more mortgage money available now than ever before. Yes, a buyer does actually have to be employed, as opposed to pre-recession practices. Credit is available to buyers with little money down (FHA…3.5 percent) or conventional buyers with down payments of - 5-20 percent down. A buyer’s credit score can determine what type of mortgage and rates are possible. But there is funding available to any buyer with acceptable credit, job stability, and sufficient income.
9. “I’m selling my home as is, and that means they take the house just as it is.”
You may want a buyer to accept your home in its current condition, but that doesn’t mean a buyer would be willing to accept your home without a home inspection, and a right to negotiate or withdraw their offer if the inspection reveals defects. As is condition typically means that a buyer cannot come back to the seller and complain about structural or mechanical problems once the closing has taken place and title changes hands. They are accepting your home with the knowledge they have gained from their home inspection (if they chose to have one). A seller in this case may be an estate or someone who has not recently lived in the home and cannot make any statements regarding its condition. Consult an attorney when selling the home in an as is condition so that you are protected and understand all the ramifications of this type of sale.
Make Your Move
The moral of this story is that now is the time. You can take an honest look at your current lifestyle and take it to another level. Yes, change is difficult and we will do anything to avoid it. But today’s vibrant real estate market makes it possible to make that move to a new community that would offer a healthier, more vibrant and secure lifestyle. Living in a home that no longer matches your needs is a ticking time bomb that will eventually end in a move that may not be timed with thought and preparation. You want to make a change when you can have the luxury of time to gather the right information so that your move meets all of your goals. It is time to listen to your gut and move in the right direction.
Hersch, Warren S. 2015. “Home Free: Survey Flags Housing, Locale Choices in Retirement.” LifeHealthPro. www.lifehealthpro.com/2015/03/11/home-free-survey-flags-housing-locale-choices-in-r.
Bruce Nemovitz is a Senior Real Estate Specialist in the greater Milwaukee area, helping older adults transition into new homes and lifestyles. He is author of Moving in the Right Direction, A Senior's Guide to Moving and Downsizing, and Guiding Our Parents in the Right Direction. Contact him at 262-242-6177, Bruce@BrucesTeam.com