Quick answer: It may be time to downsize when your home has more space, upkeep or cost than you want, and a smaller or simpler home would fit the way you live now. The best way to decide is to answer a few honest questions about money, lifestyle and timing, and then find out what your home would sell for.
Maybe the extra bedrooms sit empty, or the stairs, yard and snow shoveling feel like more work every year. Downsizing is a big decision, and often an emotional one. Here are the questions I walk through with clients so the choice feels clear, not rushed.
1. Are you paying for space you don't use?
Walk through your home and count the rooms you use every week. Every extra room still costs money to heat, cool, clean, insure and maintain.
Rooms that only get used for holidays or storage
A big yard you mow but rarely enjoy
A basement or garage full of things you don't need
2. How much upkeep do you want to keep doing?
Think about the next five to ten years, not just today. Lawn care, gutters, roof and furnace replacements, and Wisconsin winters all take time and money. If you'd rather spend weekends on other things, a home with less to maintain might be a better fit.
3. What would your home sell for, and what would you keep?
This is the number that makes everything else easier to plan. Your net proceeds are your sale price minus your mortgage payoff and selling costs. Many longtime owners have built up a lot of equity, which can open up options for the next home. A strong sale helps too: my listings average 104% of list price, and since 2019, none of my sellers has needed a price reduction.
Taxes are a common worry. Under IRS rules, many sellers can exclude up to $250,000 of gain on their main home ($500,000 for married couples filing jointly) if they owned and lived in it for at least 2 of the last 5 years. A tax professional can confirm how this applies to you.
4. What will your next home really cost?
Smaller doesn't always mean cheaper. Before you decide, compare the full monthly cost of your current home and your next one:
Mortgage payment (or none, if you buy with cash)
Property taxes and homeowners insurance
Condo or HOA fees, and what they cover
Utilities and expected repairs
Thinking about a condo? My post on condo vs. house walks through the trade-offs.
5. What kind of home fits your next chapter?
Make a short list of must-haves before you start looking. Common ones I hear from downsizers:
Single-level living or a first-floor primary bedroom
A smaller lot, or a condo with exterior maintenance included
An attached garage
Being closer to the people, places and activities you enjoy
6. Should you sell first or buy first?
Most downsizers are buying and selling at the same time. If you need the money from your current home to buy the next one, selling first or lining both closings up together is often the way to go. Your lender can tell you what you qualify for with and without selling. Here's my full guide to buying and selling at the same time in Wisconsin.
7. How will you handle all your stuff?
For many people, this is the hardest part. Start early and go room by room:
Keep: things you use and love, and that fit your next space
Give: items family members want, offered early
Sell or donate: furniture and extras that won't fit
Toss: anything broken or expired
Measure your next home's rooms before moving day, so you only move what fits.
FAQs
What is the best age to downsize?
There's no right age. It's about how you live now: the space you use, the upkeep you want, and what makes sense for your budget.
Do I pay taxes when I sell my home to downsize?
Many sellers don't. Under IRS rules, you may be able to exclude up to $250,000 of gain ($500,000 for married couples filing jointly) if you owned and lived in the home for at least 2 of the last 5 years. Check your situation with a tax professional.
Is a smaller home always cheaper?
Not always. Condo fees, taxes, insurance and the price of a newer or move-in-ready home can add up. Compare full monthly costs, not just the price.
Do I need to update my home before I sell?
Usually not big projects. Simple prep like decluttering, small repairs and a deep clean often matters most. We'll decide together what's worth doing.
Should I sell first or buy first when downsizing?
It depends on whether you need your current home's equity to buy. Talk with your lender early so you know your options before you list or make an offer.
When should I start sorting my belongings?
Earlier than you think. Sorting before you list makes your home show better and makes moving day much easier.
Thinking about downsizing? Find out what your home is worth, see how I make listings famous, start your home search, or send me a message. You might also like How to Get Your Home Ready to Sell: A Simple Checklist.
About the author
Kaeley Simek, REALTOR® helps buyers and sellers across Milwaukee, Waukesha, Washington, Kenosha and Walworth Counties. She's a Real Trends Verified top 1.5% agent nationally. In her words: “I take great pride in doing everything I can to give you the ultimate buying or selling experience. My top values are communication, honesty, kindness and having the heart of a teacher: guiding you and explaining your options so you can make great decisions. I’m extremely experienced with unique and tough challenges, and I love to negotiate.” Questions? Call or text 414-501-7880 or send her a message. She replies within 2 hours (before 8 pm).
This article is general information, not legal, tax or lending advice. Loan programs and rules change, so confirm details with your lender and agent.
