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Why Is It So Hard to Sell a Home Before Retirement? 


Retirement means leaving your job behind, but unfortunately, selling your home can feel like your toughest task yet. From targeting the right buyers to outshining new developments and tackling community restrictions, it’s no easy feat. However, you can unravel the challenges and find solutions to sell your home in a tight market. There are certain strategies you can take to target buyers and set yourself up for success when selling a home in a retirement community. If selling your home is part of your hard-earned retirement then you may want to speak with a financial advisor to help you make the right plan for you.

What Is a Retirement Home?

A retirement home, also called an assisted living or independent living facility, is a community for older adults to live in and have their specific needs met. Retirement facilities typically offer a range of services and amenities to support the well-being and comfort of their residents. Another type of retirement home is a single family home that is in a 55+ community. It can be difficult to sell a home in a retirement community because of the very limited market available to buy these homes. This is the type of retirement home we’ll cover in the rest of this article.

Why It’s Hard to Sell a Retirement Home

Although the retired population in the United States will continue growing for the next thirty years, selling a retirement home can be difficult for the following reasons:

  • Tough Market: Selling a home in a retirement community can be challenging because of your target market. Specifically, the demographics in your area may consist primarily of young families looking for their first home. On the other hand, a home in an independent living community in a popular retirement location, such as Florida or Nevada, will sell more quickly. 
  • Competition: Competition may be the most troublesome aspect of selling your home in a retirement living community. The ongoing glut of retired folks has caused a boom in retirement home construction. As a result, these brand-new properties on the market appeal more to fresh retirees who are investing in a home they plan to live in for the next thirty years. Because the homes within a retirement community are uniform, a newer model is more attractive.
  • Restrictions: Community restrictions can also drive away buyers. For example, your community might ban ‘For Sale’ signs on lawns. Likewise, your HOA may require additional fees for amenity access or require inhabitants to be fifty-five or older. Therefore, it’s crucial to understand your community’s rules when putting your home up for sale. This way, you can navigate the obstacles and find a suitable buyer. 

Reasons to Sell Your Retirement Home

A model of a house sitting on a desktop

Selling a house as you enter your new retirement home can take effort, but it’s worthwhile if you fit one or more of the following situations:

1. To Receive a Lump Sum of Cash

Retiring without sufficient savings for emergency expenses is an unfortunate reality for some older people. As a result, selling your retirement home after building equity can put tens of thousands of dollars in your pocket. Remember, selling for a healthy profit usually isn’t possible if your local real estate market is struggling. Therefore, the two essential factors – equity and real estate market conditions – must mesh to maximize profits. Otherwise, your mortgage will be too large and absorb most of the money from the sale, or the market will drag down your sale price.

In addition, it’s essential to navigate the tax implications of your home sale. Specifically, you can exclude $250,000 of capital gains taxes from your home sale as a single filer or $500,000 if you’re married filing jointly.  

2. Eliminate Homeownership Expenses

Homeownership means paying for maintenance, repairs, and property taxes. On the other hand, rent is a flat rate a landlord charges and is usually less expensive over time. Therefore, if you’re tiring the endless fixes, selling your home removes these expenses from your budget. This way, you can move into a rental unit or with a family member and not stress about the various responsibilities of homeownership. 

3. If You Want to Downsize

Downsizing looks different depending on your situation. For example, you might be ready to rid yourself of an expensive mortgage and buy a more affordable house. On the other hand, you might want a smaller living space that forces you to let go of some of your belongings. In any case, simplifying your life can reduce anxiety and monthly expenses. So, downsizing can optimize your time and financial freedom during retirement.

Reasons NOT to Sell Your Retirement Home  

However, selling your retirement home may not be the best decision, especially if you’re in one of these scenarios:

  • You’ve paid off your home: If you’ve paid off your mortgage, you’ve knocked out a significant item in your budget. So, by not selling, you can enjoy the financial freedom of living in a house you own outright. Doing so eliminates the burden of monthly mortgage payments and provides stability and peace of mind in your retirement years.
  • Moving is more expensive: Selling a home and relocating can be costly. For example, when you sell your home, you incur expenses such as real estate agent commissions, closing costs, staging, and potential capital gains taxes. Additionally, finding a new home, moving your belongings, and settling into a new community can be physically and emotionally demanding. You avoid these expenses and the stress of moving by staying in your current home.
  • You don’t have a better option: If you aren’t ready to enter a retirement facility then it becomes very hard to find a reason to sell your current retirement home.
  • Mortgage payments provide a consistent housing cost: While exchanging a mortgage for monthly rent can be cheaper, a fixed-rate mortgage ensures your monthly housing expense remain stable throughout your retirement. With a mortgage, landlords raising rent is never an issue. This stability allows for better budgeting and helps you control your finances. However, it’s crucial to note that property taxes can raise monthly mortgage payments.
  • You could lose tax advantages: Homeownership can benefit your tax situation through property tax deductions and mortgage interest deductions. Additionally, some jurisdictions offer property tax exemptions or credits for older people. By not selling your home, you can continue to take advantage of these tax benefits, potentially saving you money and improving your financial situation.

Bottom Line

Real estate agent contacting a home owner

Selling a retirement home can present unique challenges due to factors such as your local demographics, competition from new developments and community restrictions. However, understanding these challenges and implementing effective strategies can increase your chances of a successful sale. Researching market values, partnering with an experienced real estate agent, preparing your home for sale and effectively marketing your property are crucial steps to attract potential buyers. With careful planning and execution, you can navigate the complexities of selling a retirement home and achieve your desired outcome.

Tips for Selling a Retirement Home

  • Selling your home or staying put in retirement both have major financial ramifications. From navigating the tax benefits to maintaining cash flow, it’s crucial that your decisions help you reach your goals. Fortunately, a financial advisor can guide you in optimizing your assets. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you’re nearing retirement and want to change your housing situation, you’re facing a complex web of decisions. Here are three options for selling your current house and buying a retirement home.

Photo credit: © AungTun, ©, © Zastrozhnov