Many retirees have been sitting on the sidelines waiting for the real estate market to recover, so that they can sell their current McMansion and downsize into a retirement home or condo. That’s not likely to happen for years, maybe a decade or more, if they are waiting for the full recovery of lost value. A case can be made that they will make up a portion of any loss on the great deal that they get on the new place, since it too will be down in value; however, when downsizing there is most often a net loss on the two deals. Enter the tax credit on the new buy, which may make up some of the difference and take away a little of the sting.
If the person is already retired, they may already be in a low enough income bracket to take full advantage of the $6,500 credit for existing homeowners. Of course, they also have to sell their home in the face of a tough market, but that is a separate challenge. The tax credit only lasts until the end of April, so it is important to get their current house on the market now. Maybe they’d agree to write a listing agreement that also expires at the end of April, if their current house hasn’t sold by then. Maybe they’ll explore other options for their current house, even if it doesn’t sell by the end of April deadline.
In many cases, retirees who are selling a big home may wish to move into a luxury condo complex, maybe one associated with a lifestyle, like a golf community; so, the move might financially be a lateral move and the tax credit could be a nice kicker to help get it going. The point here is that we, as Realtors, have another tool to use in our discussions with potential retiree home sellers, one that should help spur action. So, read the article and come up with your own way to explain it to your potential retiree clients. Maybe it will help them overcome the inertia that has locked so many in place recently.
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