Downsizers have unrealistic expectations
Older homeowners are underestimating how much money they can raise by downsizing according to equity release referral service Key Partnerships.
In a survey of estate agents Key Partnerships found that two thirds (66%) saw more enquiries to downsize in the past year, with the main reason being to raise money (60%).
However nearly three quarters (72%) of older homeowners were said to have unrealistic expectations of how much money they can make.
The main reason was a lack of suitable homes for downsizers, effectively pushing up prices for suitable properties.
Will Hale, director at Key Partnerships, said: “Downsizing is attractive for millions of older homeowners as part of retirement planning as it appears to promise tax-free cash and is clearly driving increased enquiries for estate agents.
“But older homeowners are struggling to achieve their financial objectives with the combination of rising prices and a lack of supply meaning that downsizing simply does not add up for clients.Will Hale
“Estate agents are increasingly recognising that equity release is a real alternative which enables homeowners to stay in their home and raise cash but it should be part of all conversations with older homeowners considering downsizing, when for many the maths simply doesn’t add up.
“Whilst as an estate agent selling houses is the major revenue driver, where the economics don’t work from downsizing, clients will simply withdraw their properties from sale.
“Estate agents who increasingly discuss equity release as a potential alternative are able to benefit from an additional revenue stream by referring potential clients to a specialist.”