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found that 73% of Americans over the age of 50 would like to stay in their current home for as long as possible. This understandable desire is rooted in the need for comfort and freedom, but new research shows that it may come with an unexpected financial tradeoff.
A recent report from Retirement Research Center at Boston College found that there is a significant negative relationship between the age of the home seller and the price they receive for the sale of their home. In their analysis, an 80-year-old seller gets a 5% lower sales price than a 45-year-old seller who owns a comparable home. At a typical home price of $400,000, this means a loss of $20,000.
Luckily, according to Suze Orman, there are some steps you can take to reduce this “aging penalty.” Here’s what she advises.
Be proactive about home maintenance
The report found that there are two factors that contribute to the hidden costs of aging. One is that homes sold by older people are less likely to be well maintained and deferred maintenance quietly reduces value.
“Ongoing maintenance is necessary even when you have no intention of moving,” Orman recently wrote. blog post. “Taking care of your home today can save you even greater costs later. Old bathrooms and kitchens also play a role in these hidden costs.”
However, she notes that although it’s important to maintain your home, you shouldn’t make any upgrades that you can’t easily afford.
“Whether or not to do a renovation depends not only on your needs—a bathroom that’s safe for older people is exactly what you need!—but it also depends on your finances,” Orman said. “Although an updated kitchen may mean a higher selling price, it should also make financial sense.”
Ask for help when it’s time to sell
The report found that the second factor that drives older homeowners to sell their homes at a lower price is that they are more likely to sell their homes outside the MLS and to investors. Older sellers may turn to easier selling options for a number of reasons – a desire to speed up the process, a feeling of overwhelm, health difficulties or a need to move quickly.
“This is often not the smartest financial move, because it gives your home away from the competition,” Orman said. “When you’re selling, you want as many people as possible to see the home.”
That’s why when it comes time to sell, she recommends asking family members for help.
“I know it seems hard to imagine that when you’re in your 50s, 60s or 70s you’ll find yourself in a situation where you just want to take the ‘easy’ route and sell to a buyer that an agent brings to you,” Orman said. “This is where family can help: Adult children, or even grandchildren, can help make sure your home is marketed to the widest possible audience when it comes time to sell.”
By taking these steps, you can avoid the costly penalties of aging while enjoying your home for as long as possible.