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Whether it’s because of retirement, kids leaving home, a drop in income, divorce or other life events, it sometimes makes financial sense to find a smaller, more economical place to live.

Whatever the reason, it takes a shift in thinking to consider moving into a smaller home. It can be a hard decision, with some stress, anxiety and even fear – but don’t let your emotions make the final decision. Review these benefits, potential drawbacks and strategies to downsizing, and then make a plan. In our experience, most homeowners who make the leap to a smaller home are ultimately very happy with their new life.

Address your fears and concerns

Trading down means changing a lifestyle, especially for long-term homeowners, and some people are resistant to change. There is a certain comfort level in staying with the familiar – but keeping things comfortable and familiar is not always the smartest course of action.

If you’re reluctant to downsize, think about the things that make you hesitate. Write them down. If you’re making this decision with a partner, do this exercise together. Then discuss your challenges and decide if they are legitimate obstacles or not.

Common issues that downsizing homeowners face:

Getting rid of your stuff

Moving to a smaller home means you must sell, give away or throw out furniture, books, kitchen supplies, holiday decorations and a little bit of everything. You’ll have to sort through and empty out the garage, basement, and attic. For some people, their emotional attachment to “stuff” is hard to overcome.

If you can start early and systematically getting rid of some things, it will make the entire process easier – for everyone. You may feel reluctant at first, but you’ll eventually feel liberated. So, make a plan – and be methodical.

Start by classifying everything into four categories, then tackle each group

  1. Giveaways. These possessions will go to friends and family who can use them. This also includes sentimental items that some family members might want, like your adult daughter’s high school cheerleading outfit. Why is that in your attic anyway? Don’t be offended if no one wants your grandmother’s china cabinet. Sell it and be done with it. She’d admire you for being practical.
  2. Sale items. This pile is optional – but if you’d like some extra cash for your big move, this is a good way to make a few bucks. If you have a lot of stuff to sell, consider hiring an estate sale company to organize a partial estate sale for you. It can really pay dividends. They will handle arranging and staging, pricing, advertising and staffing on the day of the sale. And while they charge a fee, they’ll often bring in more money than you’d make on your own with a traditional garage sale, meaning more money in your pocket at the end of the day.
  3. Donations. Anything that you and your friends and family don’t want or things that didn’t sell at your estate sale but is still useful can go to Goodwill, Salvation Army, or plenty of other worthy nonprofit organizations. Most of them will pick up larger items if you call ahead of time to schedule it, and you can write off the value of the donations against your taxes at the end of the year.
  4. Trash pickup or dump. No matter how much we want to think otherwise, some things just don’t have a second life. Find out when the bulk trash day is in your neighborhood, and leave it outside for the city to pick up.

No room for guests

You may not be able to host a huge family holiday at your new home. There are ways to work around this – someone else in the family can take responsibility for hosting, or everyone can still gather at your place but then spend the night at a nearby hotel.  


Sometimes it’s hard to give up the impressive image of a big home. If you really think about this one, it becomes less important. Being smart with your money and making good financial decisions is prestigious in its own right.

Here’s the good stuff that you can look forward to…

Increased cash flow

If you're spending less on your mortgage payment, you’re going to have more money left over every month for other needs, desires or fun stuff. You can also invest more in your retirement funds.

More time

Fewer rooms, smaller spaces and smaller lawns cut down on the time spent to clean and maintain your home. You’ll have more hours in the day to do something else more enjoyable!

Lower utility bills

Everything’s cheaper with a smaller home, include the costs to heat or cool, light the rooms and water the lawn.

Reduced consumption

You’re less likely to buy stuff you don’t really want or need if there’s no place to put it. That’s not only good for your budget but ultimately for the planet.

Less stress

Less responsibility, smaller workload, increased cash flow and greater flexibility – added together, these all work together to reduce stress. Homeowners who have successfully downsized are usually happier when they're no longer overwhelmed by the demands of a larger home.

The effects of the current real estate market

Whether it's a seller’s market or buyer’s market, it doesn’t make a huge difference when downsizing because you’re on both sides of the market. But one could argue that downsizing in a seller's market would be ideal because you’re selling a big place, which may mean more cash on hand after closing. Your Caliber Home Loans, Inc. ("Caliber") Loan Consultant can help you run some numbers, and your real estate agent can advise you on home prices for your current home and the smaller homes you’re interested in buying.

The best of both worlds would be to sell in a seller's market and buy elsewhere in a buyer's market. Either way, a seller could end up owning a free-and-clear smaller home.

Buying and selling – which one comes first?

Should you sell first and then buy, or buy first and then sell? This is a common dilemma facing a homeowner who’s looking to move.  

Generally, it's better to sell your existing home before buying a new home. This keeps your emotions in check, which is especially important when downsizing.

But some markets will dictate that it's better to buy before you sell. Discuss this strategy with your real estate agent and your Caliber loan consultant.

Start a new phase

Looking back on your life, do you remember the anxiety you felt whenever you started something brand new, something that caused your life to change dramatically?

Whether it was starting college, moving to a new city or having kids, you knew everything was about to be different – and it was a little scary. Anything worthwhile or important is going to be somewhat stressful and challenging, but that doesn’t mean you shouldn’t do it.

If you review these strategies and make a plan, you’ll minimize the stress. And that should make it easier emotionally too. Think about this: making a big change and starting a new phase can inject energy and excitement into your life.

So make a plan – and then make the leap!

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