Top 5 Downsizing Mistakes To Avoid In BC

Okay so you have decided to downsize. It means you are ready to close one chapter of your life and start a new one. That can be exciting and scary at the same time. The process of downsizing can feel really rewarding with some expert advice and some personal planning.

There is no right way or wrong way to downsize but there are some common mistakes people make that can make downsizing a lot more stressful than it should be. Having an expert in your corner can simplify the downsizing process. Here are the top 5 mistakes people make during downsizing and tips on how to avoid them.

1. Not Having A Plan 

Plan out the downsize. Talk to your family members, your financial planner, your accountant etc. make sure you know where you would like to move and what kind of a timeline you’re looking at. On average, you should give yourself at least 3 months from the idea of downsizing to move-in date in your new home.

Normally, you would want to have sold your house before purchasing your next one. These timelines can get tricky with the sale of your current home and purchase of the new one. An expert realtor can always help in this scenario and put in contingencies in the contracts that can protect you. 

2. Not Having A Budget: 

You worked hard and relentlessly to purchase your home and pay your bills and mortgage on time. There is no denying that a lot of hard-working Canadians like yourself consider their home and its equity as a top resource to finance their downsizing and fund their retirement as well. But you have to be extremely careful about budgeting for a downsize.

The goal should be to keep your housing-related expenses to 30% of your total income, especially if you’re retired and on fixed income. You can look into a worksheet  from CMHC to help you stick to your monthly budget and meet your financial goals.

3. Understanding Your Home’s Value: 

Just because the market is hot, it doesn't mean it will stay that way. You need to speak to a trustworthy realtor in your area who can provide you with a Comparative Market Analysis. Feel free to get in touch with me to understand what are the most important factors in determining your home value. I can also suggest small repairs and touch ups that can enhance the value of your home without significant upfront costs.

4. Closing Costs: 

Remember what your house sells for is not equal to how much money gets deposited in your bank account. You have to factor in closing costs that can run from 3-5% of the value of your home. Secondly, if the property you are selling is not your primary residence, there might be capital gains tax implications. I can give you a general idea if capital gains tax applies to your home but you should always consult an expert when unsure.

5. Rushing The Process: 

Last but not least, parting with your home can be an emotional process. After all, there are so many memories and feelings attached to it. A major transition like that can be an emotional process and there is no reason to rush it. We understand that and part of my job is to help people with that transition by reducing the stress of selling and moving. 

You can always reach out to Sunny Cheema by phone at 604-657-5004 or by email for a stress-free consultation to learn more on how to prepare yourself for downsizing. 

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