The Rules of Downsizing (Part 3): The Real Cost of Downsizing — What No One Tells You
After years of helping clients through the move, I’ve noticed something surprising that most people underestimate the emotional side of downsizing but overestimate how much they’ll walk away with once the move is done.
They expect a big windfall and a smaller mortgage (or none at all). What they often get is a mix of one-off costs, hidden fees, and lifestyle adjustments they hadn’t planned for.
So let’s talk about the real cost of downsizing, the one that doesn’t always fit neatly on a spreadsheet.
1. Selling Isn’t Free
Let’s start with the obvious: selling your home comes with costs.
Between agent fees (usually around 2%), marketing campaigns, legal work, and property styling, the average homeowner can easily spend $20,000 to $30,000 before the “For Sale” sign even comes down.
And if your property needs repairs or cosmetic updates to attract buyers, that number can climb quickly.
But here’s the good news: in most cases, it’s money well spent. A small investment in presentation can significantly increase the sale price, so think of it as part of your transition, not just an expense.
2. The New Home Isn’t “Cheaper” — It’s Different
Many people assume downsizing means saving money automatically. Not always.
Apartments and lifestyle communities often come with strata fees, body corporate levies, or maintenance charges that can easily replace what you saved on rates and garden costs.
You might also face stamp duty (unless eligible for concessions) and moving expenses. And if you’re buying into a retirement community, you’ll need to understand entry contributions, deferred management fees, and exit charges, all of which vary widely and can eat into future capital.
So before signing anything, get clarity. Read the fine print. And ask your adviser or solicitor to translate what it means for your real cash flow.
3. Emotional Costs Count Too
The biggest cost of downsizing isn’t always financial, it’s emotional.
You’ll go through days where everything feels exciting, followed by days that feel like loss. The move will test your patience, your marriage, and sometimes your sense of identity.
And that’s okay. It’s part of the process.
The mistake is assuming the stress means you’ve made the wrong decision. In reality, it just means you’re doing something brave.
4. The Upside: Hidden Savings
The bright side is that once the dust settles, most people tell me they’re spending less, not just in money but in energy.
Downsizers often save thousands per year in:
Utilities and maintenance
Travel costs (if they’ve moved closer to family or amenities)
Insurance and council rates
Impulse spending (less space means fewer “things”)
And perhaps most importantly, they gain peace of mind.
That’s hard to quantify, but it shows up every time someone tells me:
“We should have done this years ago.”
Final Word
Downsizing isn’t just a financial move; it’s a life reset.
Yes, there are costs. But handled with planning and purpose, it’s one of the smartest decisions you can make for your long-term freedom and wellbeing.
Get the numbers right. Understand the trade-offs. And make sure every dollar you spend brings you closer to the lifestyle you actually want and not just the one that looks good on paper.
Next in the series: Avoiding the Most Common Downsizing Mistakes.
Book a complimentary 20-minute session to discuss how to make downsizing work for your lifestyle and finances.