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Is It Time to Sell the Family Home?

Do some homework before deciding to leave the empty nest

Couple talking to real estate agent on front lawn, sign in yard reads for sale by owner

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Deciding whether to put a for sale sign in the front yard on your home, where you remember your children playing, can be a difficult decision.

En español | At some point after the children have gone and the retirement parties have ended, a homeowner might look around and wonder if the time has come to let go of the family house. She might also wonder if she should do it right now when she hears that it's a seller's market in much of the country and that May typically brings the highest sales prices. Our advice? Call up a spreadsheet or grab a legal pad and pencil, then work through the steps below before making this major decision.  

Calculate how much equity you have in your home

A generation ago, most retirees faced a relatively straightforward equation: Cash in on the equity in your home and relocate to a smaller space with lower costs and fewer responsibilities. But that math no longer necessarily adds up. Many boomers are still saddled with mortgages, with little equity in their homes to tap. In this case, moving might not be wise. To find out where you stand, have a real estate broker evaluate your house well in advance of when you might put it on the market. Ask for the amount you would net after broker’s fees, and also subtract an estimate of any improvements you’d need to make to get the house ready for sale. Finally, consider how much moving costs might be and whether they would need to come from your house profits.

Hunt for your next house before you sell

Keep in mind that finding a new home to move into might be a taller order than you are expecting. Home prices across the country are up 9 percent from a year ago, and inventory is down 12 percent, according to Redfin. Rising interest rates mean some markets are even tougher, as buyers compete for scant inventory under time pressure. Before you enter the fray, it helps to know exactly what you’re after in your next residence, and exactly how much you'll have to pay to get it. Beyond that, you’ll also want to spend some time getting to know any new locale or neighborhood to make sure you’ll actually enjoy living there — especially if it represents a major change from where you live now, or will define much of your retirement years. Consider spending a week or two in any potential new area, and while you're there, try to gauge new or different expenses you'll face. Will a new open floor plan lead you to buy all new furniture? Are there condo fees or parking fees, or will you spend more for food and entertainment there than you do now?

Call your accountant

Moving can bring tax implications to consider. For instance, if you sell your house, any profit over $500,000 for married couples or $250,000 for singles may be subject to a capital gains tax. Your property taxes might be higher, or lower, or your new state — unlike your current one — might tax Social Security income. All of that will affect your monthly budget.

Tally what you'd pay to stay

Of course, staying put has its costs, too. Add up all the maintenance costs related to your current home, including landscaping upkeep, repairs and housekeeping. You should also think about whether there are any big expenses that are five or 10 years away: Will you need a new roof, or something like a chair lift to get to the second floor? Factoring these costs into your current monthly payment (if you have one) will help give a better comparison for the stay-vs.-go equation.

Consider all the options

Don’t rule out selling your house, then renting a new one. If you do so and avoid sinking your equity into buying a new home, you can use the profits from your home sale to supplement your retirement income. This can be particularly helpful if your nest egg is modest. You could also decide to use the costs you save by not moving to invest in upgrades to help you age in place. Hire help, like a gardener or housekeeper. Modify your property so the house is more accessible for the long haul. Are you lucky enough to have extra space above a garage to rent out, should you need the cash in the future? “Look at your house like it is a tool,” says Eric Stewart, a real estate broker in the Washington, D.C., area and the founder of Widow Care, an online community for widows and widowers. “It should empower you to live in whatever your preferable future might be.”

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