Selling your home is common among older adults looking to downsize or move into a retirement village. Read on to learn more about selling your home and explore the options you can choose.
A helpful checklist packed with information to help you understand and navigate the process of selling your home.
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Many over-60s find they need to downsize in retirement. Whether it’s because your children have moved out or because your property (and garden) is too big to maintain, downsizing gives you the opportunity to purchase a home that’ll better suit your needs in your next phase of life.
Running and maintaining a large home can be costly and, ultimately, detrimental if you’re spending money faster than you’d planned. Look closely at your retirement plan and how much you can afford to spend each week – knowing that you’ll likely have extra healthcare costs to account for and a smaller pool of money to draw down from as you age. Reducing your expenses now by moving into a more affordable home could save you in the long run.
One of the key parts of retirement planning is deciding how you want to enjoy your golden years. Having a clear idea of where you want to live, what kind of house or apartment you want to live in and what facilities you need close by should guide your decision making. If you are seeking a more social atmosphere and an active lifestyle, moving into a lifestyle community or retirement village can be a great option.
If, like most older Australians, you plan on staying in your home for as long as possible, purchasing a mobility-friendly home that will adapt with your physical needs as you age is vital. This means an apartment with a lift or a low-set house with a separate shower and bath (so you don’t need to step up into the bath to shower) and easy-to-use hardware, such as lever-style taps. One of the benefits of moving into a lifestyle community or retirement village is that the houses/apartments within them are typically mobility friendly, with additional safety features (such as emergency buttons).
An auction involves potential buyers bidding on your property in front of other interested parties. At the end of the auction, the highest bidder becomes the successful buyer of your property, if the highest bid matches or exceeds your reserve price, which is set by you (with the help of your real estate agent). If the bidding does not meet your reserve, the property is ‘passed in’, meaning it won’t sell at that auction. You may then choose to offer your property via private sale, or sell at a later date.
Pros: Auctions give you three opportunities to sell your property: prior to the auction, auction day, or through private negotiation (if the property is passed in). You choose the reserve price, so the property cannot be sold unless bidding reaches that figure. And, you get to choose a settlement date that suits you – but it’s usually 30 days after the auction date.
What’s more, there is no cooling-off period for buying at auction. The successful bidder has to settle the contract, even if the house doesn’t pass inspections or the person changes their mind/can’t afford it.
Cons: Auctions can be expensive, as they require an advertising campaign and an auctioneer. The seller is responsible for these costs, regardless of whether the property sells or not. Furthermore, if your property is passed in, you may lose prospective buyers because it may indicate your price expectations are too high. The public, high-pressure nature of an auction may also turn off some buyers, even if they like your property. As the seller, you also need to be emotionally ready for the auction, as you may be asked to make a very big decision on the spot by the agent/auctioneer if bidding stalls or it looks like you may not meet your reserve on auction day.
If you’re having trouble deciding whether to sell via auction or privately, look at how most homes are sold in your local area. Ask your agent for case studies of both auction and private sale, so you have some facts to support the decision you make. Make sure you’re fully aware of your financial outlay and discuss potential risks with your agent.
Also known as ‘asking price’ or ‘private treaty’, a private sale is a less confrontational way to sell than an auction. The seller usually engages the services of a licensed real estate agent, who markets the property and acts on behalf of (and in the best interests of) the seller. The agent is contacted by potential buyers and manages negotiations between them and the seller. Sometimes, the seller may advise their agent to adjust their asking price. Contracts are then drawn up by the agent if a price offered is acceptable to the seller.
Pros: Buyers generally prefer purchasing via private sale, as many like to keep their business low-key, so this gives you a broader audience. With no auction deadline, you can take your time to think about offers that come in. This means less pressure to accept low offers. People who express interest are typically genuine buyers, who know their financial limit and can commit to their offer. Private sales can give you greater flexibility with contract clauses during a negotiation. A private sale may also be less expensive than conducting an auction, as you will not be paying for an auctioneer.
Cons: Sometimes, private sellers cannot set the home inspection times (due to the agent’s schedule). This means you may need to make your home available at times that are inconvenient for you or for potential buyers. If you choose a price that’s too low, you may sell your property for less than market value. If you choose a price that’s too high, your property may not sell for weeks or months. A three-day ‘cooling off’ period is usually included in the contract, which gives the buyer the option to change their mind.
If you’re having trouble deciding whether to sell via auction or privately, look at how most homes are sold in your local area. Ask your agent for case studies of both auction and private sale, so you have some facts to support the decision you make. Make sure you are fully aware of your financial outlay and discuss potential risks with your agent.
What are some common downsizing mistakes to avoid?
1. Overestimating what your current home is worth. It’s easy to fantasise about the high price your house will fetch, especially if you’ve been out of the market for some time. Get a valuation by a real estate agent - and look around online at what similar houses in your area sold for. This will give you more realistic expectations. 2. Underestimating what a new home will cost. Everyone wants and likes to think they might score a bargain but these are extremely few and far between, especially in Australia’s housing market in recent times, so don’t bet on it. 3. Ignoring the pension or tax implications. There are implications to banking the proceeds of your home sale, and they can mean losing your Age Pension, so it’s important to know the rules around that and the tax implications. 4. Forgetting about the costs involved in selling a property. There are all sorts of fees for agents, auctioneers, marketing, conveyancing and lender’s fees. Get across these before you set about downsizing.
Should I invest in home staging?
Staging (aka dressing) a home for sale to appeal to a wider range of tastes has been rising in popularity in the past 10 years, with some experts estimating that it can add an extra 5 to 10 per cent to a property's sale price. You can choose to either partially stage (i.e. declutter and add a few cosmetic touches) or fully stage (bring in all furniture - usually for empty houses). In most Australian states, staging services can cost anything up to $6,000, so employing staging assistance really depends on your budget and whether you really need it. If the state/condition of your furniture and decor is quite shabby and dated or is perhaps of a unique taste that may not appeal to a broad audience, it is worth considering.
Do I have to tell Centrelink if I sell my house?
If you are receiving pension payments, you have 14 days from the time the sale proceeds hit your bank account to notify Centrelink as to what you are doing with them. If you are planning to buy another house, you can apply for a 12-month exemption from Centrelink, so the money from the sale that’s in your bank account isn’t included in the assets test for the pension.