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Sellers Guide
How to Downsize Your Home: A Seller's Guide
How to sell a larger home and move to a smaller one in Southern California: when to start, what to do with decades of belongings, how to think about taxes and where to go next.
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In short
• Downsizing is a financial decision and a logistics project. Plan both, and start earlier than you think you need to.
• Decide where you are going before you decide when to sell, so you are not making a rushed second purchase.
• Taxes, including capital gains and property tax rules for moving, can affect the choice. Confirm the details with a CPA.
• Sort and clear belongings before photos. It improves the sale and makes the move easier.
Downsizing your home: why people do it
Most people downsize for a mix of reasons. The kids have moved out, stairs have become harder, or the cost and upkeep of a large home no longer fit. Others want to free up equity for retirement, move closer to family, or trade a yard for a lower-maintenance condo or townhome in a walkable area.
In Southern California, many longtime owners hold homes that have grown a great deal in value since they bought them. That equity is often the reason downsizing is possible, and also the reason it deserves careful planning. The questions to answer are how much of that equity you want to take out, what you want your next home to be, and when you want to be in it.
How to downsize your home: decide where you are going first
The biggest mistake downsizers make is listing before they know where they will live. Southern California has a wide range of options, and each carries different trade-offs.
Think about what matters to you day to day.
• A smaller single-family home, which keeps a yard and privacy but still involves maintenance.
• A condo or townhome, which usually lowers maintenance but adds association dues and rules.
• A 55-plus community, which offers amenities and a social setting, with its own rules and fees.
• Renting for a time, which gives you flexibility and lets you sell your home without a second purchase.
• Moving to be closer to family, in or outside the region.
Buying and selling in the right order
How you line up the sale and the purchase depends on your finances and your tolerance for risk. If you need the proceeds from your current home to buy the next one, selling first, or negotiating a stay after closing, is the lower-risk path. Our guide to buying before you sell walks through the options, including contingent offers, bridge loans and rent-backs.
Money and taxes in general terms
Start with a net proceeds estimate rather than a sale price. The number that matters is what you take home after the mortgage payoff, closing costs and any taxes, and our calculator is a good first step. A free valuation gives you the price range to put into it.
Capital gains tax can apply when you sell a home that has gained value. California homeowners may be able to exclude some of that gain on a primary residence if they meet federal ownership and use tests, and the limits and rules can change. A CPA can tell you what applies to you, and whether the timing of your sale matters.
Property taxes can also change when you move. California's Proposition 19 allows some homeowners who are 55 or older, severely disabled, or affected by a disaster to transfer their existing property tax base to a replacement home, with conditions and limits. The rules are specific and the details change, so read our Prop 19 guide and then confirm with the county assessor or a CPA before you commit to a purchase.
Clearing a lifetime of belongings
Clearing the home is usually the slowest part of downsizing, and it is emotional as well as physical. Begin with the rooms you use least, such as the garage, attic and guest rooms. Sort into keep, give to family, donate, sell and discard. Set a deadline for each room.
Do this before photos. A cleared home photographs better, shows larger and lets buyers picture their own belongings in it. If the job feels too large, estate sale services, organizers and movers who specialize in senior moves can help. We can recommend the right order of work and flag which repairs are worth doing and which are not.
Prepare the house for sale
Long-time homes often need small updates to show well, such as paint, lighting, flooring touch-ups and landscaping. Your pricing specialist can tell you which are likely to matter to buyers in your neighborhood and which are not worth the money. See our staging and selling checklist for more.
A simple timeline
Most downsizers do best with a timeline that runs backward from a target move date.
Three to six months before listing, set your goals, get a valuation and a net proceeds estimate, and start sorting belongings. Two to three months before listing, choose your next home or short-term plan, make agreed repairs and line up movers. At listing, you and the team launch the marketing, then manage showings and negotiate offers. After an accepted offer, escrow typically takes a few weeks, and you can ask for a flexible close if you need extra time to move. Ask your listing team to match the plan to your market.
How to downsize your home for retirement
Start with the destination: size, location, stairs, upkeep and monthly costs. Then work backward to a sale date. Decide what you will keep, sell, donate or pass on, and begin with the rooms you use least.
Plan the sale and the move together so you are not carrying two homes longer than needed. Talk to a CPA or financial planner about taxes and retirement income before you commit. A listing agent can help you set a timeline and price that fit it.
• Pick the next home and budget first
• Sort belongings room by room
• Set a target sale date and work back
• Confirm tax and income effects with a professional
Questions
Downsizing: common questions
When is the right time to downsize?
When your finances, health and plans point that way, and before you feel forced. Starting early gives you time to sort belongings and choose where to go next.
Should I sell first or buy first?
Selling first is usually lower risk, since you know your proceeds before committing. You can negotiate a rent-back or flexible closing if you need extra time to move.
Will I owe taxes on the sale?
It depends on how much the home has gained and on federal and state rules for primary residences. A CPA can confirm what applies to you.
Can I keep my property tax base if I move?
Some homeowners can under Proposition 19 if they meet its conditions. The rules are specific, so confirm with the county assessor or a CPA.
What if I am not ready to sell yet?
A free valuation does not commit you to anything. It tells you what the equity is, so you can plan on your own schedule.
See how much equity you can free up.
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