The Upside of Downsizing; How to Rightsize in Marin

The Upside of Downsizing; How to Rightsize in Marin

Every place has a story – and for Marin County, our story is a quality lifestyle, magnificent natural surroundings and a maturing population. Marinites know how to live well.

However, I hear lot of homeowners who’ve reached a point in their life where they look around at a large empty nest with its high maintenance, and they tell me, “I don’t really need all this space,” “I don’t need to be maintaining a big home anymore” and “I don’t want to be climbing all these stairs as I get older.”

They feel stuck because they’ve heard that it’s impossible to downsize from a large family home in Marin and find an acceptable, affordable, replacement home in Marin.

Not true. Not in my experience and I’ve helped a lot of clients do just that.

Homeowners do have a lot of questions and legitimate concerns, but I’d like to share some facts and tips on how to deal with some of those concerns.

1) “I can’t afford to move!”

If a homeowner has been in a home for a long time, capital gains taxes might be substantial. An individual seller is allowed a profit of $250k (for married couples $500k) tax free. Everything above that is taxable as capital gains.

Many homeowners take advantage of Proposition 60 which allows homeowners, age 55 or older to sell their primary residence and transfer the base year value of that property to a replacement property. There are plenty of lovely, spacious homes and condominiums at a price point to make buying down feasible.

For homeowners who would consider moving out of County check out info on Prop 90; taking your tax base to other counties. There are a few reciprocal counties that allow Marin owners to transfer their tax base: Alameda, Santa Clara, and San Mateo Counties, and several in Southern California.

An increased base in property taxes is also an issue. Many homeowners have amazingly low tax bills. Even if a homeowner buys a replacement property at a lesser amount, their taxes will reflect the new base and could be considerably higher.

There are options that give you tax benefits: put your home in a trust; create an income property for a few years before selling and then transfer that to another income property via a 1031 exchange; take equity out of your home for a down payment on another home. Sit down with your tax consultant and run some scenarios.

There are cost benefits and concerns about downsizing (rightsizing), but once your kids have their own kids, the reality of moving into a home with less overhead, less maintenance, flexibility, convenience, more amenities and a lifestyle that relates to you now—can outweigh concerns.

2) “I won’t be able to find an affordable, single-level replacement home in Marin.”

Yes, of course you can. One of the primary reasons people think about downsizing is the challenge of maturing in a multi-level home. A predominant goal for downsizers is looking ahead to living on a single level.

Another concern is being able to find a home in move-in condition. You may have to use some resources for cosmetic changes, but ultimately you can find a well-maintained, updated home with a yard, garage and amenities you may not have in your current location like a pool, club house, and proximity to shopping or transportation.

3) “Where will I go if I sell my home before I close on a replacement home?”

Logistics of selling/buying requires preplanning and confidence in your options which include simultaneous close, a rent back in your current home for a period of time after close of escrow and/or temporary housing . With the current lack of inventory and high buyer demand sellers are in position to ask for flexible terms of sale.

Historically, fall months of September and October bring a fresh surge of inventory to the market, but at the end of the third quarter we’re down a bit; the remainder of 2016 will probably be a weaker year than last if the downward trend continues.

4) “What’s my home worth?”

Know the current value of your home and price it right. Ask me for a comparative market analysis (CMA) of your home. The CMA is objective. Pricing at or slightly below market results in the more buyers seeing your home and brings the best price. When you look at comparables, you can be sure that buyers are looking at the very same numbers – so overpricing is glaringly clear and gives an unwelcome impression.

Homeowners who want to price their home (high) according to what they “need,” can find themselves disappointed, frustrated and ultimately unsuccessful in selling. If that worked, we wouldn’t see price reductions and homes sitting on the market (In Q3, a full 73% of homes sold in less than 60 days on the market).

I know it’s difficult to be objective about your home’s value, but all the wishing and hoping in the world will not make your house worth more than what a willing buyer is going to pay. Price it too high and you may end up getting less in the long run once it sits on the market for a while. Price it too low and you may leave some dollars on the table.

In the long run setting an objective, realistic value saves disappointment and stress, and gets you the best price for your home.

Many homeowners who’ve waited for the housing market to reach its peak to sell their home might want to consider making a move now and taking advantage of buyer demand.

Unfortunately, by waiting for the right signs and for others to make the move, sellers may miss their opportunity to be on the right side of the supply/demand equation.

Keep in mind that when a flood of owners decide it’s time to sell, buyers may not be as plentiful or as able to afford a home as they are now. Smart buyers and sellers can spot this as an opportunity and do quite well.

Call me to discuss your goals I’m here to help.

(415) 847-8331 or shimkas@yahoo.com

For more resources visit my website AboutMarinHomes

Audrey Shimkas, M.A.

Associate Broker, Bradley Real Estate

CalBRE #00896873

Seniors Real Estate & Downsizing Specialist