When You Are This Age, Your Home Value Starts To Take A Big Hit
If you’re planning to downsize and fund your golden years with equity in your home, you may want to check the calendar. It turns out that when it comes to real estate, timing isn’t just about the market — it’s about your age.
Recent research suggests that once a seller reaches 70, the price they get for their home starts to drop. And it’s not a small dip. By the time a seller reaches 80, they often walk away with much less money than their younger neighbors in the same type of house.
A big discount no one wants
According to a recent study by the Center for Retirement Research at Boston College, home sellers age 70 and older sell their homes for about 6.6% less than younger sellers. If you are 80 or older, that gap widens even more.
We are not talking about a few dollars here. On a $400,000 home, a 6.6% hit means leaving $26,400 on the table.
Why is this happening? This is not the case because buyers have gone out to find old ones. It is usually a combination of two things: the situation at home and the need to move.
Deferred maintenance is a deal-killer
I have seen it many times. A couple moves into a house in the 40s, it keeps everything clean for two decades, but then it starts to run down. Maybe the roof is 25 years old or the HVAC system is not working properly.
When you’re 75, the idea of overseeing a $15,000 kitchen renovation or tackling a dirty roof replacement feels like a nightmare. So, you don’t.
You list the house “as is.” Buyers, being the skeptics that they are, see those old plans and start cutting their offers. Not only do they eliminate maintenance costs; they levied a tax of suffering upon it.
(Related: “How to Increase Your Home’s Resale Value”)
The incentive trap
Another reason why older salespeople earn less? They usually need to move. Whether it’s for health reasons or to be close to family, a seller who needs to be in an assisted living facility next month doesn’t have the luxury of waiting for the perfect offer.
Buyers and their agents can smell that urgency. If the house has been on the market for 60 days and the seller already lives in another state, lowball offers start flying.
How to protect your equity
If you’re approaching that “expensive” age, you don’t have to settle for less. Here’s how to keep your balance in your pocket:
- Sell faster than you think: If you know you’re going to lose weight, don’t wait until a health problem forces your hand. Selling at 65 instead of 75 can save you tens of thousands of dollars.
- Continue with the little things: It’s much easier to fix a leaky faucet today than it is to explain a water stain to a home inspector three years from now. Check out these inexpensive ways to kick your appeal and stay on top of things.
- Consider a listing test: Spend a few hundred bucks to find out what’s wrong before you write. It is better to fix the problem on your terms than to have the buyer demand a large loan at the closing table.
- Watch out for common mistakes: Don’t let simple mistakes take away your value. Check out these 5 common mistakes to avoid when selling your home.
Selling a home is one of the biggest financial decisions you will ever make. Don’t let your age give a buyer a discount by mistake.
