Tuesday 26 September 2017

Your guide to trading down

Forewarned is forearmed, particularly when it comes to downsizing. Fran Power asks estate agents for their tips on how to make a smooth transition.
'Don't start looking until you know what you can afford.' Photo: Depositphotos
'Don't start looking until you know what you can afford.' Photo: Depositphotos

Fran Power

1. It's all about timing. "When you're downsizing," says Geralyn Byrne of Sherry FitzGerald, who looks after many of Dublin 6's redbrick sales, "there's a balance to be struck between not leaving it too late and not being too early. It has to be the right time. You can't turn the clock back if you sell too early.

Of course, the right moment will vary from couple to couple, but most downsizers time their move around the departure of their children from the nest. They say, 'We have to move when the children go. We'll look for something easier to heat, easier to keep and while we have time to enjoy the rest of our lives'." Her advice is, "Make the move while you can do so together and when you're well and can look forward to the next stage of your life together."

2. Decide whether you want to pass on your inheritance sooner rather than later. As Geralyn Byrne points out: "Some couples are looking at their children, who are finding it hard to get on the ladder. They want to give them their inheritance when they need it and while they can enjoy it." That can mean bringing forward their downsizing decision.

3. Staying in your neighbourhood will make for a smoother transition. "We don't move very often in comparison with the UK," says Geralyn Byrne, "and we have a hugely emotional tie to our homes and our communities. We stay put for longer if our kids are in the local school, for example, we put down roots. Unless you have a very specific desire, maybe leaving Dublin 6 to go out to be by the sea then by and large, stay within your area. You know your dentist and doctor and, if you're a churchgoer, you have your local parish. You still have neighbours you know. People tend to buy on their home patch which is an easier transition."

4. If suitable properties are not available in your neighbourhood, says selling agent Ken MacDonald of Hooke & MacDonald, who deals with many downsizers, "consider moving close to where your grown-up family are located as a means of having support when needed and being near grandchildren, also to public transport and shops." If you do move closer to your offspring, though, talk through what might happen if they decide to move abroad or away. "One thing I would warn about," says Geralyn Byrne, "is if your kids have moved out of Dublin and you move out to be near them, maybe to give a hand with the grandkids, think about what happens if young Johnny gets some money and they move back to Dublin and you're left there. Be careful of that."

If you're downsizing in the country, think about buying closer to town. West Cork agent Pat Maguire estimates that 25pc of his buyers are in their 50s and 60s, downsizing, and coming from the UK, Cork or Dublin, and he is seeing more and more people picking a village or town to be near. "We built too big here in the Celtic Tiger, four or five bed houses with ensuites, and these houses are not fit for purpose as families grow older. Now there is a big shortage of bungalows. Downsizers are moving to small villages or towns for services, amenities and possibly broadband. The closer you are to a village for broadband the better, while the further out the worse it tends to be."

Factors such as broadband and distance to your nearest village are especially relevant when you're living in rural Ireland. "The countryside is changing," says Pat. "Rural shops at the crossroads are gone, and now with 200 post offices closing, that will have an impact. Very small villages and towns will suffer. Now the criteria for the downsizers I meet is proximity to a village - within two to three miles is the sort of radius they want. The test is, if you want to get a pint of milk, how far do you have to travel before you'll decide to take it black."

5. Check the profile of an apartment block. If you're downsizing to an apartment, says Geralyn, "You don't want to be in a block that's principally rental. Look for somewhere with a high percentage of owner-occupiers. Generally, that means more involvement in management and of common areas and maintenance." Ideally, choose a small apartment scheme with a good security system. You want to be able to close the door and go away for a few weeks at a time without worrying about your property. And always look at what exactly is covered by your service charge.

6. The same rules apply if you're moving to a new housing development. Look at the buyer profile, advises Geralyn Byrne. Ask the agent if it is aimed at young families. You don't want to be the only person about during the day, while they are out working. On top of that, a 'younger' housing estate may seem like an energising option, but remember how many times you may need to retrieve a football from the back garden.

7. Value your property before you put it on the market. Don't start looking until you know what you can afford. Says Ken MacDonald: "It's best to obtain an estimate of the value of your existing property so that you can budget accordingly."

8. If you move to a new area, factor in that getting integrated into a new community can be more difficult once your children are past school age. "You're not out walking the pram or the football as when you had young children," says Geralyn Byrne, "though, of course, you may play golf or bridge, so these are other elements to consider when choosing where to live."

9. In planning future outgoings and running costs, says Ken MacDonald, check the energy rating of the properties you go to see.

10. Don't sell until you know what you want. Do your homework first, says Geralyn, check out what type of house will suit and what it will cost. "Some of my buyers say, 'No, we want to have a garden, even a small one to have coffee and read papers on a Saturday morning'. So an apartment won't suit them. Go beyond the hall door and look at the location, check it at various times of the day to see how busy it is. Do your checking with military precision to protect yourself."

11 Is your house your principal asset? Many older people have seen their pensions dwindle over the past decade and may be depending on the proceeds of the sale of their house as a nest egg or to fund their retirement. "Be sure," says Geralyn, "if you want to get the differential between what you buy and what you get for your house, that you don't erode that. Decide whether you want money out of the sale or to scale down to another property."

12 Decide whether to buy or sell first. This is a major issue, but one where downsizers generally have the advantage. "If you have a good house, it's easier," says Geralyn, "If you're moving from a larger house, and downsizing, you'll probably get good money for it." It puts you in a strong position as a buyer.

13 Bridging finance is very difficult to get at the moment, so if you are still paying a mortgage, be careful about buying before you sell. Banks are telling buyers to sell first, so factor in the possibility that you may have to rent, and the costs involved as well as storage, until you buy. Geralyn Byrne has vendors who are dipping a toe in the market to see what is out there. "When they are confident what they want is out there, then they sell. Don't put yourself at risk, until you know it's available." If you are particular on the orientation of a property, say, or want a bungalow, remember that will make finding your downsizer home harder.

14 Is it a good time to downsize? Traditionally, downsizers are in a strong position because they tend to have paid off their mortgages. "It's a market on the up," says Geralyn, which means "it can be a wonderful time to trade down." Ken MacDonald agrees, "Now is a good time to buy because there is an improvement in supply, although there are not enough apartments being built." If you are still paying your mortgage off, however, the received wisdom is, Buy and sell in the same market. Geralyn adds a proviso, "Unless the market is dipping, then you sell and rent and take your time buying. But don't gamble with your house."

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