Here are things to consider before selling your home to...

Here are things to consider before selling your home to pad your retirement accounts. Credit: Getty Images/twinsterphoto

A 2023 report from investment firm Vanguard estimates that about a quarter of Americans age 60 and over could move to a cheaper housing market and use the equity in their homes to upsize their retirement savings.

Those with home prices near the national median could have cleared about $99,000 in equity, on average, in 2019 (the year the data was gathered). Homeowners in top-priced markets could have cleared an impressive $346,000, on average.

“We’re at a peak of where housing prices have been, ever, in history,” says Matthew Gottshall, a certified financial planner in Westlake, Ohio. “It’s been more and more common for people to weigh the option of, ‘Do I downsize? Do I take the equity that’s grown in my house?’”

Assess the market

Selling (and potentially downsizing) your home and pocketing the equity is a good strategy in a market where you can make it work. This is easier in pricier housing areas, when you may be able to trade your high-value home for a smaller place in a more affordable market.

Selling property also isn’t a slam-dunk task. “Just because you want $800,000 for your home, the market may not care,” says Andrew Herzog, a CFP in Plano, Texas.

Additionally, you have to make sure you can afford to buy a replacement home that you like.

“My parents — the price of their house has gone up fairly substantially, but everything they want to sell and move into has increased even faster,” Gottshall says.

Research the costs

Make sure you understand property taxes and the basic costs of living in your desired locale, as well as the costs for selling your home. (Hint: The real estate agent commission is generally about 5.5%, although that may change after the recent legal settlement by the National Association of Realtors.) Also, if you’re picking up a mortgage on the new home, there will be closing costs, and rates are probably higher than  when you last purchased property. All these numbers could chip away at your net sale profit.

In an area with a very low cost of living, make sure you understand what to expect from the municipality. Are streets and sidewalks maintained? How is garbage collected? Is the fire department responsive?

“I had one client who had a beautiful home on the Mississippi Gulf Coast,” says Ralph Bender, a CFP in Temecula, California. “I said, ‘Wow, you must like it, you basically pay no taxes down there,’ and he said ‘Yes, but you get no services either.’”

Weigh the current price of upkeep

Keeping your house could mean maintaining a big yard, replacing an old roof and managing a second-story primary bedroom into your later years. Selling gives you a chance to downsize your responsibilities and look for something that makes it easier to age in place.

Moving to a home with less to clean and fewer stairs can make it easier to stay long-term.

Think about family

You don’t necessarily have to move closer to loved ones — but it’s helpful. Bender recalls a client who moved with his wife to South Carolina because they liked to golf. When the client died, his wife moved back to California because she didn’t know anyone in the area.

“There’s got to be a support network for the family,” Bender says. A community, he says, encourages social participation and contributes to overall longevity.

Test-drive the location

If you’re buying in a new city, visit in every season to ensure you like the area year-round. Vacation there if you can.

“Every area has its negatives,” Bender says. “You have to find out what they are before you move there and be prepared to deal with them.”

Hazel Secco, a CFP in Hoboken, New Jersey, remembers clients who moved from New Jersey to North Carolina and found that the lifestyle wasn’t what they expected. “They had to come back after selling the North Carolina [house], so it just ended up costing so much more,” Secco says.

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