Selling a House to Pay for Care: A Guide for Seniors and Families

Debbie Beard, a senior real estate specialist in Melbourne, Florida, says it’s “extremely common” to meet seniors who have sold their home to pay for care, and she has helped many seniors through the process. In fact, people older than 55 accounted for more than half of all home sellers in 2022, according to a report from the National Association of Realtors.^[01]

Beard was inspired to work with older adults selling their homes after a career as a senior living executive director. Thanks to that career, she has real insights into the challenges these particular sellers face. Most importantly, she notes the experience comes with deeply personal challenges for each family.

“Working with seniors is complex and emotional. Many seniors have lived in their homes for 25 or more years,” says Beard. “It’s the whole process of the unknown. They don’t know what it will be like in assisted living, away from the home that carries their memories.”

Despite the potential for intense feelings, selling a parent’s home to pay for care can easily be a positive and smooth experience. Whether you’re selling a house to pay for palliative care, assisted living, memory care, or a nursing home, the following will cover what you can expect financially and walk you through the crucial steps to take.

Whether you’re a senior planning a move to senior living or their family member, the first considerations are usually planning and timing. Beard says clients usually first want to know whether they should they sell the house before or after a move to senior living.

“When I first meet a client, I look at their situation holistically,” says Beard. “How is their health? Why are they moving? It’s important to look at the whole picture.”

Questions like these can help establish an appropriate plan. Beard recommends seniors and their families consider key factors such as financial needs, stress, and timing.

Reasons to sell a home before or after a move to senior living

The main reason to sell before moving to senior living is that a home sale is the primary source of funds for care. If a house doesn’t sell quickly, families accrue extra costs — like mortgage and tax payments, utility bills, insurance, and maintenance — alongside senior living costs.

Reasons to sell after moving to senior living include the following:

• The situation is urgent. If you observe signs your parent is unable to live alone, or if they’ve been hospitalized after a fall or health event and can’t return home safely, waiting may not be possible.
• Your key concern is managing stress. Seniors who live in their home throughout the selling process must declutter daily. They also need somewhere to go during showings.
• You want to ensure ideal home staging. An empty house gives a real estate agent a blank canvas. They can set an ideal scene, and this could potentially appeal to more buyers.

Bridge loans can make selling a house to pay for care more manageable

Most commonly used for real estate purposes, bridge loans are a short-term financing option intended to “bridge the gap” between homes. They enable sellers to take advantage of their home equity before their house officially sells, freeing up funds to pay for assisted living in the meantime.

Let our care assessment guide you

Seniors who receive financial assistance from the government — such as VA pensions, VA Aid and Attendance, or Medicaid — should carefully evaluate their options and the potential repercussions of selling their home. The programs have the following net worth and asset limits:

• To qualify for VA benefits, including Aid and Attendance, veterans must have a net worth lower than $150,538.^[02] This doesn’t include the value of a veteran’s home. Selling a house to pay for care, however, would likely increase a veteran’s net worth and render them ineligible.
• Medicaid qualification requirements vary from state to state, but many states mandate that a person can’t have more than $2,000 in assets. Selling your parents’ home to pay for care can disqualify them from Medicaid coverage.

Contact an elder law attorney in your state to learn more about selling your home and government benefits. Also, your local Area Agency on Aging may offer free legal assistance.

Selling a house to pay for assisted living doesn’t have to result in a hefty tax bill. In fact, in many cases, the proceeds from a home sale are tax-free. Specifically, an individual can exclude up to $250,000 in profit from the sale of a primary residence, while a married couple filing jointly can exclude up to $500,000, according to the IRS.

Seniors must meet two conditions:

• They must own the home.
• They must have lived in the home for two of the last five years. ^[03]

After you decide to sell your family member’s house, Beard suggests defining milestones and goals. She notes that the process can often take four months.

Before listing, seniors and their families should do the following:

• Decide on an ideal date to sell. Spring is prime home-sale time, so consider seasonality when you plan. If you can, use the preceding winter to knock out any repairs, updates, and deep cleaning.
• Find a trusted real estate agent. A Google search for “best realtors near me” can be one way to start, but word-of-mouth recommendations are essential, too. Go to your network for guidance. Ask neighbors, friends, colleagues — anyone you can think of.
• Research your area’s home values, and know what to expect. Apps like Zillow and Redfin are a good place to start. Though not typically necessary, seniors can ask their real estate agent to coordinate a home appraisal. An appraisal is an outside, professional assessment of a home’s value, and it should incorporate a visual inspection and research of market trends. Appraisals typically cost several hundred dollars.^[04]
• Declutter and consider home improvements. Beard recommends a pre-inspection so sellers can make needed changes and avoid unexpected problems. A pre-inspection identifies significant safety and mechanical issues that may jeopardize a sale.

Simplify the selling process by gathering necessary documents

Before putting a house on the market, seniors or their families should have access to certain key documents:

• The home’s sale contract. This confirms the owner of the home, when it was purchased, and what price the current owner paid. This also notes any terms and conditions that may have been communicated to the current owner before their purchase.
• Maintenance records and capital improvement receipts. Diligent buyers will want to know how recently house repairs were made. In addition, proof of capital improvements — like a new roof, driveway, or flooring — can help sellers command higher profits.
• Homeowners insurance documents. Review your policy to determine how long it will cover your house and belongings if you no longer live in the home. In many cases, insurance companies consider a home vacant after it’s been unoccupied for 60 days. If your parent moves before selling their house, this could result in a higher policy premium. Due to increased risks of theft, vandalism, and fire, insurers charge up to three times more to insure a vacant home.^[05]
• Utility bills. Past utility bills can show that a seller is not delinquent on payments. They can also provide prospective buyers with an idea of estimated monthly costs.
• Home appraisal. If you opt for a professional home appraisal, this can reassure buyers that a house’s listed price is fair and comparable to other properties in the area.
• Homeowners association (HOA) records. If your parent is part of an HOA, these documents will show how frequently dues increased in the past, making buyers more aware of potential future costs.
• Warranties. Simply put, warranties increase buyer confidence and act as a powerful marketing tool for real estate agents. If a buyer is considering multiple properties, a warranty or the lack of one could influence the decision.

Memory loss adds an extra challenge for seniors and families putting a house on the market. Unless valid paperwork states otherwise, only the homeowner can transfer the home to a buyer. However, two legal designations — power of attorney and guardianship — can empower adult children to make decisions for their ailing parents.

Power of attorney and guardianship

Power of attorney (POA) can help a trusted adult child or other family member fulfill a senior’s wishes. Real estate decisions, like selling a house to pay for care, count among the main reasons families set up this legal designation.

To set up a power of attorney, the senior — or “principal”— must sign a document granting a person permission to make decisions on their behalf. Though power of attorney is often simple to establish, there are various types. An elder law attorney can help you prepare the power of attorney document, answer specific questions, and streamline the process.

It’s best to set up a power of attorney in a senior’s early or middle stages of dementia. If deemed incompetent, a senior can’t execute the power of attorney. In these cases, families can petition for guardianship to sell a house. They’ll have to prove their senior loved one has significant memory loss, requiring a legal guardian to manage any property. While petitioning for guardianship with a court can be a crucial last resort, it’s a more extensive, lengthy, and expensive process than establishing power of attorney.

Talk with a Senior Living Advisor

Whether or not a family member has dementia, the selling process can awaken complex emotions and arguments. Nevertheless, Beard has several tips for lessening the stress and potential upheaval:

• Make sure your real estate agent knows a network of professionals. A real estate agent who works regularly with seniors should know how to coordinate an estate sale, hire packers, and/or work with a senior move manager. All this should ensure few of the moving tasks fall to the family.
• Keep the process transparent. Everyone involved in the selling process should read any contract before a parent signs it. This minimizes confusion and helps all family members stay on the same page.

  “Adult children are often nervous, thinking, ‘What did Mom sign? Did she get scammed?’” Beard says. “It starts an argument out of love. When adult children can look at a contract and see what it contains, the conversation with their parents is calmer.”
• Be proactive about organizing and downsizing. For Beard, painter’s tape and sticky notes are simple yet effective tools. To help seniors anticipate the size of their new home in a senior living community, she tapes out the size of each room. Her clients also mark items with different-color sticky notes, signifying which items to sell, pass down, and keep.
• Emphasize senior living benefits. Seniors may feel stress about transitioning to a community, so talk about what they can expect, like a welcoming atmosphere, fun activities, new friends, and plenty of amenities. Ask a community representative for their best tips to smooth the transition.

An informed real estate agent can make all the difference when selling your parents’ home to pay for care. Above all, families should ask, “How many seniors have you helped?” says Beard. A realtor experienced in working with older adults may help families navigate the selling and downsizing process more smoothly.

In addition to searching online or asking your network for guidance, consider the National Association of Realtors’ search tool. For an additional level of expertise, you may also want to look for a designated Senior Real Estate Specialist.

An elder law attorney can answer questions about guardianship, power of attorney, and whether it’s financially beneficial for a senior to sell their home. The National Academy of Elder Law Attorneys maintains a list of member lawyers.

A Place for Mom’s Senior Living Advisors can help assess your family’s specific situation, send you information about different types of senior living, discuss various payment options, and connect you with local communities. Plus, their guidance always comes at no cost to you.