What Is Rightsizing In The Eastern Bays?
Rightsizing is what Kiwis often call downsizing. And it’s an increasingly popular topic.
However, downsizing is often not the correct term to describe the process Kiwis go through once kids have flown the coop or if life circumstances change.
Not everyone is looking for a smaller home. Some people still want a spacious home, just one that is single level. Others want a modern, low maintenance home so that they have more time to spend with their friends and family.
Some of my clients are moving to a rural property (no way downsizing) simply because their children have finished school in Glendowie College or Sacred Heart College.
What should Libby and James in the Eastern Bays do?
Libby and James (names have been changed for privacy reasons) have lived and worked in Auckland for the past 40 years and lived in the Eastern Bays for the past 25 years.
They have enjoyed bringing their children up in this neighbourhood, going to Kohimarama Beach for a swim, every day in summer, followed by ice cream at Joshua’s Ice Creamery and Coffee Shop, going to St Heliers Tennis Club for a game in the morning and then brunch at La Vista. They love walking their dog at Churchill Park and finishing off with a Japanese dinner at Musashi.
Over that time, they have seen the local community change and evolve, and neighbours come and go. Like many Kiwi families, kids have gone out to flat with others. They are now living in the big family home on their own.
Libby and James are now at the crossroads as to whether to sell and move to an appropriately sized home that will suit their needs as they grow old or make the necessary modifications for retirement.
Some Common Concerns And Challenges Rightsizers Face
It’s a Digital Real Estate Market
Having to sell their home in a digital and rapidly changing property environment. Marketing is a very different ballgame in this age and time, and an inappropriate marketing plan anchored on outdated marketing strategies can often produce detrimental results.
Choosing The Right Agent
Embarking on the selling process and finding the right real estate agent that can best represent their interest. I have come across many who have never sold a house in the last twenty years (or not at all). Interviewing the right real estate agent does not come easy for them, especially if they have seen this person around for many years. How can difficult conversations be had?
Making Decisions Without a Sounding Board
Some seniors are widowed and making major decisions such as selling their family home alone. Sometimes, they may experience external pressure to free up some cash in their home.
Staying In The Neighbourhood
Some may still wish to stay in a familiar neighbourhood and face difficulties looking for suitable options. This is especially when prices have increased and the amount left after the new purchase may be insufficient for retirement.
Others may have large plots of land potentially suitable for subdividing and adding another dwelling. How to achieve that from a financial perspective (especially when there is a large amount of equity to unlock without much supporting income to service the loan) can be especially challenging, given the current lending environment. There might also be tax implications if they do not structure it properly.
Buy First Or Sell First
Most will struggle with the questions: should I buy or sell first? There are obviously advantage and disadvantages to both camps and it depends on whether you prefer the certainty of how much you will get or the certainty of where you will be moving to. Read here for more information.
Key Points To Consider When Rightsizing
What sort of time frame are you looking at for your next move? This is obviously dictated by personal (such as health, family) or financial reasons.
But even when you decide to only move 2 years later, you should consider that it takes time to ensure that the house is in the right condition for a sale (for e.g. renovations and deferred maintenance) and your next purchase may not be ready or built yet.
If you have to cancel your sale process because the new purchase has delays in settlement, you may end up losing buyers and face a different market when you decide to sell again. This is on top of the stress and anxiety in the initial campaign, and the wasted marketing spend.
Sometimes, the right house may present itself but you will need to act fast – this is why we strongly advocate keeping in contact with us and knowing your house’s value and options (for e.g. being able to get the house ready for sale in a couple of weeks rather than 8 months due to renovations) so that you can act fast when you need to.
Where Do You Want To Move To?
Where would you like to live?
The first part is figuring the location. Would that be in Auckland (and if so, which areas) or outside of Auckland?
The next is part is figuring out what kind of house you would like to live in. Are you happy to live in your existing house and make the necessary renovations or would you prefer to buy a brand-new, well-insulated modern home or even consider building your own or perhaps move to a retirement home?
New Builds & Off-The-Plans
Many new builds and off-the-plan apartments take time to build and they typically start their sales cycle a couple of years in advance. To ensure that you get your preferred apartment/house (for e.g. orientation, floor plans etc. may differ significantly between units) and therefore get to enjoy it for many years to come, you may want to consider putting a deposit down and buying early.
Even if you do not have the cash sitting in your bank, options may be available to use the existing equity in your home, plus you still have time to prepare your home for an eventual sale. Speak to a mortgage broker about how there may be solutions and workarounds to this. You may be pleasantly surprised, and it’s all free.
If you are moving to a retirement village, that’s a whole different ballgame.
The following points may be helpful (learn more):
- Think ahead and consider what you might need in the future – will you be able to continue to live there if your health or mobility declines?
- Imagine the ideal lifestyle in a retirement village, and make a list of the things that are most important.
- Visit different villages (e.g. Grace Joel if you want to stay in the Eastern Bays) and find out about the lifestyles they offer, including housing options, facilities and services.
- Talk to the residents – they know better than anyone what life is like in the village they live in.
- Take time to read the documentation associated with buying into, living in and leaving the village, including the disclosure statement and occupation right agreement.
- Find out the total costs. How much is payable on entry? What are the ongoing expenses? Will you share in any capital gain when you leave? Will you have to pay for any capital loss? How will these affect your future and the choices you have?
- Get independent financial advice from a financial planner or accountant with experience in retirement villages.
- If you are doing estate planning and thinking about buying into a retirement village, get independent legal advice from a lawyer with relevant experience in retirement villages. Ask them about the different legal titles and what they mean.
What will your cost of living be in retirement? Do you have enough to sustain your current standard of living?
Here are some possible costs:
- Healthcare (which could go up)
- Children ( hopefully they are all financially independent now although you might want to help them into a home)
- Daily living expenses
- Funds for unexpected expenses (new car, repainting or replacing the major appliances etc.)
Do you have a passive income to support these expenses or have you got enough savings stashed away to cover them?
After working out the sums you need for retirement, look at your existing mortgage and see how a sale of your home will help you achieve these goals. We have seen many who have thought that because they needed $X in their future, their home will therefore need to fetch $Y.
This is unfortunately not the right approach – what a home will fetch depends on the right marketing plan, competent agents and prevailing market conditions.
Like it or not, it does not depend on, or is correlated to, your retirement needs. There is absolutely no guarantee that waiting for a certain amount of years will lead to the house fetching the dream price.
Conversely, in the period between waiting and finally selling, there are opportunity costs for example:
- rates, mortgage interest and maintenance on an expensive house
- not being able to enjoy the rightsized house and the intangible benefits that may come with it
- the risk of market deteriorating and selling at a lower price when you actually need to sell (for e.g. health situation changes)
Involve family or friends in your decision-making process but do not be unduly influenced. Speak to the professionals who have the experience and expertise in these areas.
How We Can Help You With Your Goals
For many people like Libby and James, the thought of rightsizing, selling and moving is daunting, even though they realize it’s a bridge they’ll have to cross sooner or later.
In our experience, we’ve learned that making the move SOONER is much easier than waiting until LATER. People often fail to appreciate how, as one gets older, it becomes harder to move (both emotionally and physically).
Regardless of where you choose to move next, selling your house for the top dollar is always going to be the top priority. This protects what you have painstakingly built and saved for most of your working life.
At the current stage of the Auckland property cycle where buyers have more choices, ensuring that your property stand out from others is immensely critical. This requires a team with experience, the right expertise, cultural know-how when connecting with different buyers and may entail taking certain steps prior to the campaign launch and pitching your home to the right audience.
And we can help you buy right. With our extensive experience and based on your set of specific criteria, we can advise or alert you to any potential suitable opportunities (off-the-plans, private sales or VIP access to upcoming listings). This ensures you can make the right choice without competition, buy at pre-sale prices and choose the ideal unit.
From the moment you make contact, my team and I will work closely with you and advise how best to achieve your goals. Our extended sphere of professionals (even movers!) going above and beyond to help our clients, cultivated through the years, also makes a critical difference in making the entire process a successful one. We are contactable in person, by phone or email – whichever way you prefer.
In short, we understand what it means to achieve what you are looking for, and selling your precious home is only part of the puzzle. Our job is to support you throughout the process from beginning to end, and make the process as stress-free and enjoyable as possible.
Found this post useful and have more questions?
Do not hesitate to contact us for a no-obligation discussion over coffee on your future plans to either buy or sell. We are happy to share my marketing strategies, even if you do not sell with us. Simply because the success comes from the execution.