what to know in your decision making process to buy or shop for a home at retirement

Here are things that real estate agents wish they knew about YOU!

Are you a Buyer or a Shopper?

A “shopper” is someone who is testing the market to see what happens, and is at the beginning stage of exploring housing options, but does not need to move anytime soon.

We recognize that many of seniors are 1-3 years away from retirement or making a move and they are just exploring their options.

A buyer is one who is ready both financially and emotionally to move into a new home on a specific time frame and has compelling reasons for purchasing a property – we will discuss some of the reasons below.

Consider the Perspective of a Real Estate Agent

The top real estate agents build their business around providing the best possible service to their clients. They count on referrals from satisfied clients to grow their business. They want to devote as much time and effort as possible to helping homebuyers or home sellers accomplish their goals.

Why An Agent Has to Identify True Buyers from Shoppers 

Many people have the time and desire to shop, and are entertaining thoughts and desires to move. But without a compelling reason, shoppers may not be buyers anytime soon.

It’s only fair for shoppers to view real estate agents as professionals, just like any other who provides their services and expertise in exchange for their livelihood income (Doctors, Lawyers, Accountants, etc.). But of course, this doesn’t always happen either. Many buyers still choose their agents based on personal connections (friends or family) vs. professional experience and expertise.

The 80/20 Rule

Based on the Pareto-principle of economics and also known as the “law of the vital few”, the 80/20 rule states that 20% of your efforts will produce 80% of your results.

In Real Estate, “shoppers” make up the majority of people contacting real estate agents, especially those helping home buyers. This means they aren’t ready to fully engage the real estate agent, and they aren’t prepared to take advantage of the full range of services and dedication that the agent offers.

From an agent’s stand point, this can potentially prevent them from fully dedicating their time and effort to those clients who are serious buyers. And obviously, it is not a productive source of the agent’s revenue.

The Disconnect Between Shoppers and Agents

Shoppers may accuse an agent of trying to “sell them a house.” This is a clear disconnect because in fact, an agent’s job IS to sell the buyer a house… one that fits the buyers’ criteria!

Of course an agent can only do their job if a client is buying. But if they are only shopping, then it becomes a completely different story.

Agents could spend much of their time, expertise and resources with people who say things like:

“I would like to buy a house in… and this is my budget, $$$. Or I would like to see this house today or this weekend….”

But when the agent asks what their time frame for moving is, they simply say:

“we are open… we are flexible… in the next 6 months,” or another common response is: “when we find the right house”

These are all big red flags to a serious real estate agent.
In general, agents are targeting the majority of their time and efforts to working with buyers who are ready to move. However, that doesn’t mean you’ll get the door slammed in your face if you’re not quite there yet.

What If You Are a “Shopper?”

Just keep in mind, it’s not “free” to use an agent’s services. Just like other professionals, you should choose and respect a Realtor® just as carefully as you would choose a doctor or lawyer.

But as a “shopper” please don’t take this harshly. All it means is that you haven’t reached this phase of the decision-making process… or the buying stage. It’s only then where you should engage an agent for their full services.

Although you’re not quite there yet, if you are serious about buying a home, you’ll eventually advance to this point. Just continue on with your own research and planning,

And to be fair… you need to kindly disclose this to an agent upfront:

“I have not made a decision to make a move therefore I am not ready to hire an agent to represent me.”

“However, I do have some questions on this community or house…”

And in this case, most agents will be more than happy to answer those questions to establish trust and perhaps gain your business in the future.

What real estate agents want to know about you

Buyer or Shopper: What are Your Reasons for Moving?

The following are few ideas that should all be taken into consideration in determining whether you really need to make a move.

Downsizing

The lower costs and manageable size of a smaller home can bring many benefits and conveniences. Downsizing to a small home, one that’s less expensive and a better-fit, is a huge way to build retirement savings. Many retirees are happy with 1-story homes with 2 bedrooms and 2 baths of roughly 1,200 – 1,500 sq. feet. And they find this is plenty for their needs and in line with their budgets.

If your large family home is mostly vacant, then the higher bills, maintenance costs and taxes, will quickly eat away savings. If you don’t need all that space and the children, relatives, or even a spouse have moved out or passed away, then downsizing could make sense for you.

According to marketwatch.com, many retirees wait far too long before downsizing their homes… until their children have finished college and moved out… or until retirement. But this should be doneeven before you retire or while the kids are still at home. The difference in retirement savings could be immense and give you a wider range of choices and flexibility.

Or instead, perhaps a senior who lives in San Diego wants to “downsize” from a $2,500 per month mortgage payment, and wants a home the same size or larger but with a lower payment.

Downsizing almost always creates some “breathing room” financially, allowing many to stretch their retirement income a lot further.

Source: www.marketwatch.com/story/5-real-estate-mistakes-retirees-make-2014-10-20

Investing the Home Equity 

After downsizing, not everyone buys a smaller home, or a home that’s actually less expensive. This can be a missed opportunity.

If downsizing does bring a big payout… be sure to spend it wisely. A well planned investment strategy is important, and includes knowing how to spend it and when. It means always being aware of potential future costs and expenses. Solid financial planning will help you consider tax liabilities associated with various savings and retirement funds (IRA, ROTH IRA, 401K, Pensions, etc.) and help you stretch your assets as far as possible.

Closer to Family

Hopefully a move in retirement to be closer to children or grandchildren will be in line with your other personal interests and retirement goals.

Some retirees also seek out housing that is large enough to accommodate guests and families for extended visits.

And equally, moving too far away from family and friends could be impractical and have you doing a lot of travel back and forth to visit them. In that case a location with easy access to highways and airports is important.

Who Is It That Wants You to Make a Move?

Is it your kids that want you to move closer to them… so they can visit you more conveniently? Are they planning on and taking care of you as you get older?

While this is a nice idea, as a senior you might feel uprooted from an already comfortable home and community. You may end up moving close to family at the cost of losing the feeling of independence and greater self-esteem.

Many agents get “shopper” inquiries from close friends, relatives, children on behalf of their close friends, parents or family members. But this poses potential problem since the decision maker is not active in the process. That’s because most likely, they aren’t motivated to make the move themselves.

However, be sure that moving close to family isn’t too big of a compromise. It’s important to find a balance between your personal retirement goals, your family and medical needs. Try to not to compromise all the things that you enjoy personally yourself.

Moving for Medical Care

If your healthcare is a priority, then simply moving closer to a medical facility is an obvious motivation. Having access to assisted care at home, or finding a home specifically suited for disabled or special needs persons are other options.

Most people who eventually move, usually to so for very specific reasons. That includes moving into an assisted living or independent living facility, or an advanced care facility. Many seniors plan to sell their homes to raise the funds needed to move into assisted living facilities where all their needs are provided for.

How far do you have to travel to see your doctor? Research several doctors before moving, especially if you have particular health issues. Find one you’re comfortable with, who is nearby, and that accepts your insurance plan.

No matter when you move or where you move to, be sure to factor in medical needs and their costs into the decision. Even if you’re in good health now, this could change at some point as you reach your 70’s and 80’s.

To Enjoy the San Diego Lifestyle

This one speaks for itself, and there’s not much you argue about no matter where you live in San Diego. Being close to the beach or mountains, urban centers, suburbs or your favorite destinations and activities is one of the principal reasons for living here.

What Better place to retire is there?

The quality of life in San Diego is matchless! It’s an active, outdoor paradise with endless attractions… the best hospitals and medical centers… great continuing education options… top professional and collegiate sports teams… a beautiful downtown… and an excellent culinary and restaurant scene.

The truth is… San Diego is a place like no other… with unlimited diversity, beauty, culture, activities… and the perfect weather to satisfy pretty much anyone!

Why wouldn’t you want to retire here? Can you think of a better place to spend the rest of your life? You can ask anyone who lives here… or just come see for yourself!

Misunderstanding San Diego

The best approach to retiring and choosing a home in San Diego is to be practical. Set your expectations based on what you know about the area. San Diego’s quality of life is amazing… and everyone agrees! People from all around the world desire to live here. Once you do your homework, you’ll understand the why the housing market is priced the way it is.

Home price and size don’t guarantee you a stellar retirement… bigger isn’t better! Other retirement destinations might offer bigger homes for lower prices, and seasonal locations like Florida, Nevada and Arizona are nice. However, the extreme weather conditions in the summers and off season are a big turn- off.

And when you compare apples to apples, you’re truly getting a much better value in San Diego. No other location matches up. You have a spectacular lifestyle and climate all year round! In this context, a closer look at the housing market, and your own practical needs in retirement, will help you clear up any misconceptions or biases you had about living in a smaller homes or retirement communities.

A few more Major Considerations to Think About

Do you really need to buy or you are just looking to shop?

These are the some of the main points to focus on as you strategize and layout the “blueprints” for your retirement:

Is Aging in Place a Better Option for Retirement?

Many seniors are truly better off to age in place whether in their existing home or another more suitable home. Many are emotionally attached to remain in the current home, in their existing community.For the most part they may already feel completely comfortable, or near self actualization in their surroundings.

Moving to a new home or location might not be compelling enough motivation for leaving friends, family, jobs, hobbies and volunteer opportunities in the community that you are already comfortable with.

Consider whether your basic needs are already being met 

According to Abraham Maslow’s hierarchy of needs:

1) Biological and Physiological needs – air, food, drink, shelter, warmth, sex, sleep.

2) Safety needs – protection from elements, security, order, law, stability, freedom from fear.

3) Social needs – Love and belonging – friendship, intimacy, affection and love, – from work group, family, friends, romantic relationships.

4) Esteem needs – achievement, mastery, independence, status, dominance, prestige, self-respect, respect from others.

5) Self-Actualization needs – realizing personal potential, self-fulfillment, seeking personal growth and peak experiences.

This is a 5 stage model that highlights how deficiencies in our basic needs motivate us to take action to fulfill our needs. We build stronger desires to meet our needs the longer we go without them. However, once we’ve satisfied our lower level basic needs, we move on, progressing to fulfilling our higher level needs. This theory of progression continues until we’ve finally satisfied our needs for self-actualization. (source: http://www.simplypsychology.org/maslow.html)

Keep this principle in mind as you evaluate your current living situation. Many times, it can be more efficient to remodel an existing home… invite family members to move in… and arrange for live-in nursing care to accommodate the needs of aging seniors.

Timing – too soon or too late?

Retiring too soon 

Do you think you’re ready to stop working? Or will you miss it too much? It’s a very common dilemma among retirees, and the transition is a challenge. Many retirees haven’t fully envisioned life after their working career ends. Otherwise the financial means are lacking, savings, pensions or investments alone can’t support a retirement lifestyle. And it can be difficult to re-enter the workforce at this age.

Planning your retirement too late 

Another common problem that can lead to limited options and poor decisions. If you haven’t given yourself enough time to plan and develop a few fallback options, then you may need to push retirement back a few years. Neglecting to plan earlier on in your working career might keep you trapped in the workforce a little longer than you had hoped.

Rest assured, you’ll find suitable options. However, not as many as you would have, if you started planning earlier. Hesitating leads to fear and worrying about retirement, instead of looking forward to the best part of your life.

Thinking about where, when and why you’ll retire are important basic steps. Of course you also need to determine how to afford your retirement life. Some basic planning tips and advice will help clarify and start to alleviate your worries.

Cut Spending

Extravagant and wasteful spending will likely restrict your retirement plans. Adapting frugal habits will make a big difference in preparing financially. Even if you’re well-heeled, it’s still a smart way to be ready for the unexpected.

Develop a budget and stick to it… embrace a modest lifestyle by living below your income. Using good judgment on purchases along with a well-defined savings plan is essential. Maximizing contributions to IRA and 401(k) plans can be a big boost and get you closer to your target.

Renting before you Buy a Home

Throughout your planning, it’s important to study several different options and take your time. Your agent will help line up potential homes and communities that fit your needs. It’s also essential not get overwhelmed or become too impatient.

Renting is a nice temporary option to help you evaluate the location and lifestyle. This way you can get a first hand look and ease into the lifestyle by meeting locals and finding your favorites places and activities.

Other reasons to rent include…

  • Sampling different neighborhoods and communities in San Diego. Get a taste of the community before you actually buy a home.
  • Consider new housing options. San Diego has many options to choose from, including: 1 or 2 level homes, manufactured homes, studios, townhouses, high-rise apartments, single-level apartments, condominiums, guest houses and more.
  • Live like a “snowbird”, spending winters in San Diego while living in your primary residence during the summers. Take more time to decide on a full-time move, give yourself enough time to plan and sell your current home.

Avoid making a rushed decision that you come to regret. Especially if the timing isn’t right and you’re not getting good offers on your current home. Renting can help you avoid pressure to buy or sell your home too quickly.

THE BIG PICTURE VIEW OF THE ROAD AHEAD

There are a myriad aspects involved with any move and buying a new home. Especially when moving for retirement… you only want to do it once… so get it right the first time! And in general, the more preparation you make, the better off you’ll be when the time comes to make your move.

Timing is the other critical factor. Maybe it’s now… or maybe you’re still a few years away. If the time for retirement is still not right, go back and reevaluate where you are. Keep researching, planning and preparing… until you know the time is right.

However, if now’s the right time to move forward, then you need to seek out and engage a dedicated real estate agent who specializes in helping buyers like you. 

Here we’ll highlight several areas to consider and evaluate, even before you reach the point of choosing an agent, in order to be sure that you are truly ready to make a move.

Now let us use a “funnel” to help visualize and help you understand where you are now:

Living a fantastic retirement in San Diego

What to Consider

Yes, you should be fully ready on your end… make sure your planning has prepared you for this move. Go back and double-check your situation. Establish if you truly need to make a move. Highlight all the compelling reasons for you to move for retirement.

Beware of Emotions

Keep in mind that this is a decision making process that presents a particularly big emotional challenge. You will be fueled by emotions throughout, both positive and negative. But either way, they can be harmful and distort you from seeing things as they truly are… especially in realizing whether there is a genuine need to move or not.

Unfortunately, our emotions often lead us to make irrational decisions… or can even keep us paralyzed, preventing us from making any choice at all. Many home buyers are heavily influenced by emotions, like fear, insecurity and pride, that prevent them from making logical decisions. Many end up making choices that go against their best interests and come to regret them.

As with many experienced real estate professionals who truly care for their clients, we easily recognize the signs and symptoms.

After all, much of the real estate industry is geared towards providing a good feeling via the images presented in advertisements… glossy professional photos of home listings and neighborhoods and professionally staged homes for example. These things are designed to appeal to us subconsciously and create a positive or negative feeling somehow.

Unfortunately, the logical side of our decision making doesn’t enter the picture until after our emotions have already made the decision for us. 

OK Then… Where’s the Proof?

How do you know this is the right decision for your timing, your budget, your goals and your particular situation?

Both positive and negative emotions often create a strong desire to take action, but the logical rationale still needs to be considered before a truly smart decision can be made. Evaluating all the facts, features and benefits is important… so you can have concrete proof to back it up your decision. Otherwise, it’s just your emotions pushing you… and emotions are very likely to change at any moment. 

Do you have any real proof that your emotions are leading you in the right direction?

Be thorough and make your decision after taking a 360∞ view of all your options.

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