| Selling

If your parents just dropped the bombshell they’re considering downsizing, selling the family home can be an emotional, stressful experience. There is so much to consider, from the right time to sell to sorting through belongings and addressing the challenges of selling an outdated home to finding a new space that meets your parents’ needs. To make this transition easier for all of you, here we share part one of our two-part series. Learn how to help your parents downsize so they sell for top dollar and find the perfect home to live out their golden years. 

The Right Time to Downsize

Although you might figure age is the main factor driving the desire to downsize, there are several influences that impact the right timing, including: 

Expenses

Downsizing offers the opportunity to increase cash flow and live a better quality of life. If your parents are finding it difficult to make ends meet living in a large, empty home, then selling can be quite lucrative. Savings from living in a smaller home can be found in unexpected ways including:

  • Reduced utility costs 
  • Lower mortgage payments (if their mortgage isn’t paid off yet)
  • Lower property taxes
  • Reduced maintenance and repair costs  

How you can help: Consider the upfront costs of selling by speaking to a real estate agent. You want to ensure the short-term upfront costs lead to long-term savings that make their retirement years more manageable. 

Years Left to Retire

If most of your parents’ income is going towards their home, it leaves little to enjoy their retirement. Ideally your parents should consider downsizing at least five, and preferably 10 years prior to their actual retirement to see significant savings. As a result, they can contribute to a financial plan that improves their cash flow when they retire. 

How you can help: Investigate the current market to find out how much their home is worth. Consider your parents’ home equity and compare that to how much down payment they need for a smaller home in an area they would love. They might find selling either allows them to live mortgage-free or at least saves thousands of dollars a year on housing costs for a more comfortable lifestyle. 

Do you have more questions about downsizing? Read these posts next:

Managing Home Maintenance

The aches and pains of aging make it increasingly difficult to manage home maintenance tasks ourselves. Even trivial tasks like pulling weeds, mowing the lawn, shoveling snow, etc. become more and more difficult for your parents each year. As a result, they either need to hire someone to assist them, which costs money, or depend on you and your siblings to assist. Chances are your time is limited, which can leave your parents living in a home that starts to slowly deteriorate. This eats into home value, and allows serious, costly issues to develop. 

How you can help: Keep an eye on your parents’ home for signs they’re not managing maintenance as well as they should. Offer to help, but also try broaching the subject of downsizing to help make their lives easier. 

The Home Is Inconvenient

Along with difficulties maintaining the home, your parents might encounter daily challenges such as climbing the stairs, bathroom slips and falls, and dangers related to overlooked repairs like uneven floors. At this point your parents need to either invest in upgrades that allow them to “age in place,” or downsize. 

How you can help: Compare the costs of aging in place renovations to the costs of downsizing to a single level home. Share your findings with your parents to help them understand what solution is the most cost-effective and allows them to live a safer, more comfortable life. 

The Neighbours are Getting Younger

Traditionally, neighbourhoods go through cycles as young couples buy homes, raise their families, and then sell as empty nesters. This introduces homes for the next generation of young couples. If your parents notice the neighbours they’ve known for decades are selling or sadly, passing away, the area they once loved can start to feel unfamiliar. They might be surrounded by construction sites as young homeowners rebuild smaller, older homes, or be disturbed by louder, more rambunctious young families moving into the neighbourhood. 

How you can help: Keep an eye on your parents’ state of mind and socialization. Do their new neighbours’ lifestyles take away from the simple pleasure of something like enjoying a glass of wine on their deck? Do they interact with their younger neighbours or feel isolated from their community? Do they complain about their neighbours? If they’re frustrated with the way their neighbourhood has changed, this is a good opportunity to strike up a conversation about different areas they might find more appealing with the amenities and services that they need as they age. 

They Haven’t Saved Much for Retirement

Many couples consider their home their main investment for retirement. Although things like home equity loans and reverse mortgages can help supplement retirement income, it isn’t limitless and can lead to issues as your parents age. Downsizing can provide more money towards their savings, while also allowing them to access even more home equity without interest or penalties. 

How you can help: When it comes to retirement, your parents need liquidity, not high net worth. It can be awkward discussing your parents’ retirement plans. However, when approached from a place of caring and concern, you can get your parents thinking about the viability of their plan based on their current finances, inflation, and their changing needs. Also, they might find that by selling and downsizing now, they might be able to retire earlier. 

You’ve Moved Away

If you’ve moved further away from your parents, they’re likely missing you. This is a good excuse to downsize, especially if you’ve moved to a more affordable area that allows them to reduce their expenses and keep more of their equity when they sell.

How you can help: Discuss the benefits of moving closer to you, and the types of homes and savings they can find in your area. Offer to help investigate their current home value and explain how selling now will get them a better home suited to their current empty nester lifestyle. 

They Really are Empty Nesters

If your parents live in a home with tons of unused space or a massive backyard with a pool, as mentioned above, it makes less and less sense for them to waste time and money running a gigantic home they barely use. 

How you can help: Point out they’re using very little of their home yet investing tons of money for upkeep. Offer to research the value of their home and show them how all the things you loved growing up no longer suit their needs yet are great selling points for a younger family. 

You Have a Space for Them

Offering a space in your home to your parents is a win-win situation. They can assist in raising your kids and paying off your mortgage. You can offer them a more affordable lifestyle in a smaller living space without the worries of maintenance and growing expenses. You can also discuss your parents investing in your home using some of the equity from their home sale. As a bonus, they can use the balance to travel without worrying about leaving their home empty and vulnerable while they’re away.

How you can help: Discuss the idea of investing in a home together, with a custom-designed in-law suite for them. Point out the cost-sharing benefits and how it will provide more money during their retirement years. If you already own a home, discuss the idea of your parents investing in a customized living space in your basement, attic, lane/garden house, etc. from the equity when they sell. 

Get more selling advice here:

Obstacles When Downsizing

You should also be aware of the obstacles you’ll face when your parents consider downsizing, such as: 

The Emotions

Both you and your parents likely have an emotional attachment to the home which can lead to difficulties when deciding to sell. This can sometimes lead to conflict between parents and kids. 

How you can help: Whether it’s you or your parents being sentimental, it’s important to validate each other’s feelings. By considering the pros and cons of downsizing together, you will make the right choice. Nothing can take away your memories, so finding the best solution for the parents who lovingly raised you needs to be the focus. A great tip is to assist your parents in the decluttering process. By sorting through their content of their home together, you can ensure the essential items are kept, the items with emotional attachments for each family member are shared, and your parents keep the items they need to create a comfortable, familiar living space when they move. You might even be surprised to hear your parents want to start fresh with modern furnishings and just a few items from their old home!

Tight Living Quarters

It’s important to consider how much house your parents can afford in today’s market. For example, if the equity gained from selling doesn’t provide enough down payment, or preferably cash on the barrel to eliminate a mortgage, then downsizing isn’t a realistic option. Your parents shouldn’t end up in a cramped living space where they don’t feel at home. 

How you can help: Speak to a real estate agent to discuss housing prices for the type of home your parents prefer. You want to make sure they get more of what they want and need while saving money for their retirement. 

Condo Maintenance Fees

Often downsizing involves a nice, low maintenance condo with amenities your parents can enjoy. However, condo maintenance fees can be a real problem, and will continue to rise as the building ages. This can put a burden on your parents when their finances are the most vulnerable. 

How you can help: Consider all the different living scenarios and how they’ll work both from a financial and lifestyle standpoint. Have your parents make a check list of what they want in their home, and work with a knowledgeable real estate agent who can ensure they optimize their new living space, amenities, finances, and lifestyle when they downsize. 

A New Lifestyle

Downsizing is a major lifestyle change. Whether it’s moving from the city to the suburbs, (or vice versa) or simply a change of neighbourhoods, preparing your parents for the change is essential. (It might even mean a move from the province or country, depending on your parents’ retirement plans.)

How you can help: Visit different areas your parents are most likely to enjoy. They might even book short-term rentals for a week, or the weekend to get a feel for different areas. From sizing up potential neighbours to measuring the noise level and exploring the amenities to trying out different home types, they can decide if the area suits their lifestyle. This can avoid disappointment, stress, and downright unhappiness when they downsize. 

Current Mortgage Terms

The timing of your parents’ home sale can lead to complications based on their current mortgage terms. 

How you can help: Check the current terms of your parents’ mortgage to find out what penalties or challenges they might face. 

The Market

The problem with real estate is that to make the most money you need to sell when the market is hot and make your downsized home purchase when the market is cooling. Of course, this is pretty much impossible. 

How you can help: Speak to a real estate agent to consider ways to make this strategy a little more plausible. Because real estate pricing varies from location to location and home type to home type, your real estate agent might find a sweet spot that helps your parents see more bang for their buck. 

To POA or Not To POA

Power of attorney (POA) often comes up for older parents who are uncertain how to proceed with financial decisions. If your parents are dealing with health or cognitive issues, you might consider setting up a family appointment with a lawyer to discuss the pros and cons of POA and whether it makes sense for your circumstances. 

If you’ve been named POA recently, here’s an article to help you get started. 

Rules of Thumb To Help Your Parents Downsize

There are a few rules of thumb we recommend to reduce stress and improve outcomes when our clients downsize: 

  • Who’s in charge? Let your parents take the lead if it’s in their nature. In this case, your job is to make your parents’ move easier, and act as the assistant as opposed to taking over the process.
  • Who’s emotions count? Remember, downsizing has an emotional toll on your parents. It’s important to make the move easier, not harder. Help your parents enjoy the process, with the opportunity to share their belongings, pass on heirlooms and look back on memories as a family. 
  • Who gets what? Avoid fighting over items in front of your parents. Instead, discuss the items you would like with siblings before you begin the “decluttering” process. Hopefully, you can compromise, so everyone gets the items that have the most meaning to them. And remember, your parents might have items they feel they can’t part with, so put your expectations on the back burner until they decide. 
  • Keep, toss, or donate? Obviously, downsizing means your parents will lose space. To streamline the decision making process on what to keep, toss, or donate it makes sense to start with the rooms your parents won’t have in their new home, such as a formal dining room or office/den.  

Whether your parents are considering downsizing, about to start the process, or you’re looking into it for them, the best real estate agents in Toronto are your downsizing BFFs. Speaking to an agent is the first step to ensure your parents get top dollar and find the ideal home to retire. 

To learn how to assist your parents during the selling and buying process when downsizing, read part two of our downsizing series right here.

Call The Christine Cowern Team at 416.291.7372 or email us at hello@christinecowern.com with any questions or to set up a call. We’d love to work with you!