You have to feel for those who are starting to or who are eligible to retire now. These people have worked hard and have seen markets go up and down over decades of craziness in our economy. It really is a gamble on hoping that you will retire at the same time the market is at its peak. Think about it, over one million Americans planned to retire this year with the idea of selling their home and cashing out a very hefty 401k retirement plan. What are they doing today? Well, a lot of them are either going back to work or sitting at home debating what to do.
Home prices and stock markets are down from previous highs in the last two years. In most situations, they are down about 20% but still up big from where they were five to ten years ago. So, retirees are not in a terrible place if they want to sell, but they are losing some value and in the case of selling their homes, they may not have an easy time of doing so.
You’re Not Retiring At The Best Time
Interest rates are up. Should they be? Technically, yes. Interest rates have skyrocketed in hopes of avoiding a recession similar to what we saw in the 2000’s. Is it working? Yes, actually it is and it’s even putting a small cap on inflation, another problem that retirees were not expecting. In some areas, interest rates can nearly double the monthly mortgage costs for new homeowners, making it nearly impossible for them to afford the property.
This severely cuts down the number of available buyers on the market. Even tougher, inventory is going back up which means your property has more competition. You can still sell now, but getting full value for your property is going to be the biggest challenge. This is where it’s good to meet with a realtor and get their opinion on the value of your home and where local markets are right now.
Where The Market Is Now
The best offers most properties are going to get right now are from investors who are looking to remodel and hold the property until the market gets stronger for them. In the meantime, they have the luxury of renting out the property to cover some losses and generate income. You can expect offers from these people and businesses to be at least 25% less than your asking price.
For sellers, there are options and opportunities to max out your value and get a reasonable offer. However, the key to that is going to be patience. It may take three to nine months for that offer to come through right now. That’s a realistic expectation you have to be prepared for before you list.
Mistakes New Retirees Are Making
What are new retirees supposed to do? They’ve had these plans for at least a decade, if not longer and now they have to adjust on the fly? This is an unfortunate time for them but there are mistakes they need to avoid that will only make their retirement plans tougher:
- Looking for the quickest offer: Any realtor will tell you that the first offer is usually not the best one, especially right now. Investors are jumping on every available property looking for homeowners who are desperate to sell. They will try to get the best deal for them and that’s why you need to be patient.
- Listing a house that needs work: What is the current condition of your house? Keep in mind, if it needs $100,000 in work, the average buyer cannot afford that type of commitment on top of an inflated mortgage. That means you are going to work solely with the investors unless you invest in your property and hope that by the time it’s ready, the market is better as well.
- Setting a timeframe to sell: It may take a year. Every house and local market is different. You need to have a gameplan in place if your house doesn’t sell in a week. You need to know what your options are instead of thinking this is going to work immediately.
- Expecting home sale to fund retirement: If you are relying on the sale of your house to fund your retirement, you need to rethink your strategy. Renting out a room, renting the entire property, putting it on AirBnb or something like that may be a better option to address immediate income without having to sell at a lower value.
The market is rarely going to be set at a perfect time when you are ready to retire. However, understanding your situation, your options and where the market is currently at are all valuable ways to set realistic expectations and have a reliable plan.
Talk To A Realtor First
Have a realtor review your property, your plans and what to expect moving forward. They can offer recommendations on the current local markets, what to do with your house and more. This free consultation gives you a better understanding of your options and how to maximize your retirement plans.
