Suze Orman Warns: The Hidden Cost of Aging in Place Could Be Thousands
Written by
Gabrielle Olya
Edited by
Angela Corry
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found that 73% of Americans age 50-plus would like to live in their current home for as long as possible. That understandable desire is rooted in a need for comfort and independence, but new research suggests it may come with an unexpected financial tradeoff.
A recent report from the Center for Retirement Research at Boston College found that there is a significant negative relationship between a home seller’s age and the price they get for the sale of their home. In their analysis, an 80-year-old seller gets a 5% lower sales price compared to a 45-year-old seller with a comparable home. On the typical home price of $400,000, this translates to a loss of $20,000.
Fortunately, there are steps you can take to mitigate this “aging penalty,” according to Suze Orman. Here’s what she advises.
Be Proactive About Home Maintenance
The report found that there are two factors that contribute to the hidden cost of aging in place. One is that homes sold by older people are less likely to be well-maintained and deferred upkeep quietly erodes value.
“Ongoing maintenance is a must, even when you have no intention of moving,” Orman wrote in a recent blog post. “Taking care of your home today is how you avoid even higher costs later on. Dated bathrooms and kitchens are also at play in this hidden cost.”
However, she notes that while it’s important to maintain your home, you shouldn’t make any upgrades that you can’t comfortably afford.
“Whether to do renovation work depends not just on your needs — a bathroom that is safe for an aging you is indeed a need! — but also on your finances,” Orman said. “While an updated kitchen can mean a higher eventual sale price, it must make financial sense as well.”
Ask for Help When It’s Time to Sell
The second factor that leads older homeowners to sell their homes for less is that they are more likely to sell their homes off-MLS and sell to investors, the report found. Older sellers may turn to easy sales options for a variety of reasons — a desire to speed up the process, a feeling of overwhelm, health difficulties or a need to relocate quickly.
“This is often not the smartest financial move, as it removes your home from competition,” Orman said. “When you sell, you want the most people possible to see the home.”
That’s why she recommends asking for help from family members when it comes time to sell.
“I know it seems hard to imagine when you are in your 50s, 60s or even 70s that you will find yourself in a situation where you just want to take the ‘easy’ way out and sell to the one buyer 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 the time comes to sell.”
By taking these steps, you can avoid the costly aging penalty while still enjoying your home for as long as possible.
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