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?