5 Mistakes to Avoid When Downsizing in North Richland Hills
When downsizing a home there is the great possibility of moving forward in a new direction. With extra money from the sale of your current home, you might be imagining the ability to travel, invest for income, live more simply, or to pay cash for a smaller property. Downsizing is often a very good idea but there are some important financial and tax implications to consider.
#1 Overestimating the Value of Your Current Home
Overestimating the Value of Your Current Home is one of the most common mistakes people make when downsizing. It is extremely important to get an accurate assessment. You can get a rough idea by using online tools like Zillow.com or Realtor.com as a place to start. However, we highly recommend that you get several impartial estimates from experienced professional real estate agents like those at Texas Best Homebuyers.
Getting more than one estimate gives you the confidence that you have an accurate estimate. Doing a few easy low-cost improvements like touching up with fresh paint, cleaning and decluttering throughout your home, sprucing up the yard by trimming overgrown shrubs and planting some flowers is always worth the effort. However, unless there are big issues, launching into a remodel or adding stylish renovations may not increase the value enough to cover the cost. Getting clear about what the home needs to sell at the highest value and if there are any issues to address is essential. We’d be happy to help you with this process and with any questions you may have.
#2 Underestimating the Cost of the New Home
Underestimating the cost of the New Home is another common mistake people make when downsizing. Using Zillow.com or Realtor.com to do a search will help you determine the recent sales prices of homes in the area you plan to buy. If it’s not too inconvenient, renting a place in the area you want to buy for a year can help you to be certain this is the right location for you in all seasons. Renting for a while can also allow you the time to find the home that is priced just right and feels just right for you. Some people find themselves adding on amenities beyond what they estimated the cost for the new home. Just be aware how quickly the extra amenities can add up!
#3 Forgetting About Taxes
Forgetting about Taxes Research now how the sale of your home will affect your taxes. Forgetting to include this in your plan might have a big impact on the amount you will have to pursue your downsizing goals. Will you have capital gain from the sale of your home How will it affect you? Search on the web for IRS Publication 523 for the current year to gather all the information you’ll need. Try this link to Compare Taxes by State
Knowing how much you’ll be paying for Sales Taxes, Personal Income Taxes as well as property taxes is essential. Research the state’s tax or revenue department to see if you qualify for any discounts. It’s important to find out whether your move will increase or decrease your overall tax situation.
#4 Forgetting About Commission and Closing Costs
The average cost to sell a home in Texas in 2022 was around 6% for commission and 1.2% for closing costs. It is a good idea to research the average closing costs which include commission for your sale and the location you are moving to. Closing costs include things like the loan origination fees, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, credit report fees, courier fee, escrow deposit, FHA mortgage insurance premium, flood determination fee, HOA transfer fees, homeowner’s insurance, points, prepaid daily interest charges, private mortgage insurance, property appraisal fee, survey fee and possibly a few more.
#5 Forgetting About Hidden Costs
Make sure the house you’re thinking about buying doesn’t need extensive repairs or maintenance that you’re not comfortable paying for. Research carefully the property taxes and any HOA fees that might accompany your new home. Also, consider whether there will be an increase in the cost of living. And, remember to factor in the costs of moving too.
Texas Best Homebuyers knows Tarrant County House values better than anyone else. We have more than 25 years of real estate experience in this area. We can assist you in determining the value of your home and provide you with an accurate comparison between what your house will sell for through a listing agent and what we can offer in cash for a fast sale if that would be helpful to you. With a direct sale to us there is no need to get your house ready for the market. And, with us there will be no commission fee and ZERO closing costs. Let us know if we can answer any questions for you regarding your downsizing goals.