Trade in and trade up

Visitors to the Fletcher household find out very quickly not to ask about the couple's previous home. It took four years to sell. Several times, Alan and Janice Fletcher were on the point of movingfrom their period cottage near Aylesbury, Buckinghamshire, but the buyers kept dropping out. They eventually lost patience and took a short-cut that has become increasingly popular: they part-exchanged. In a deal with a builder, they traded in their house for a three-bedroom semi close to the town centre. After years of frustration the family recently celebrated their first Christmas in a new home.

The Lowthians had no problems when they wanted to move. Five weeks after seeing an advert they were tucked up in their new house. Martin Lowthian already knew the part-exchange trick and didn't even wait to see if his two-year-old Wiltshire home would sell.

"We had part-exchanged a couple of years ago, so we knew how quick and clean it is," he said. The move had to be fast. Martin and his wife Veronica both had new jobs starting in London, and could not contemplate commuting from Trowbridge.

Part-exchange is still a mystery to many buyers. People who would not think twice about trading in their car seem blind to the same possibility with a home. There are restrictions, of course, and buyers should comb carefully through the small print before setting their hearts on a particular new home. Just as some car dealers take only certain, well-maintained models, so builders often set limits on their offers. They may also refuse homes over a certain age, or located too far from the new one. The trade- in price may also be less than you could get on the open market.

Fairclough Homes, which built the Lowthians' house in Redhill, Surrey, did 80 swaps last year and generally insists on buyers trading up to a home worth around 30 per cent more than the old one: "But we do bend the rules sometimes," said Mike Dobner, the sales director.

The company also offers full value for the property it takes on, as does Barratt, which built the Fletchers' home. Many shave off a significant percentage to cover the costs of reselling. Prices are generally set as an average between two valuations done for the builder, although sellers can sometimes ask for their own commissioned valuations to be brought into the equation.

Martin Lowthian figures he could have got a few per cent more on the open market than the £67,500 paid for his former home in Trowbridge. "But we more than made up any difference by saving estate agent's bills of around £1,300."

The Fletchers were underwhelmed to learn that Barratt sold their cottage within weeks. "We will probably always wonder if we could have sold the house ourselves. But that does not compare with the relief of knowing that this time our buyer would not drop out," said Janice.

Chain-breaking became an increasingly important part of builders' armoury during the recession, although Barratt has been doing it for more than 20 years. In fact it has so many second-hand homes, it claims to be among the country's largest estate agents. The group even does part-exchange deals on its part-exchanges.

The rate of swapping has become a good indicator of the state of the market. Mike Dobner says Fairclough saw a big drop in exchanges last summer when people were feeling good and expected to be able to sell homes. By autumn they were ready to give up. "After having the children home for the summer, people suddenly realise the place is no longer big enough," he explained. "That is why buying booms in autumn. But they set a target to be in by Christmas, which can be impossible with ordinary deals." And last autumn, while normal deals slowed because of interest rate rises, exchanges recovered.

Fairclough hands its second-hand homes over to agents such as the Halifax and Cornerstone. "And we make sure they are put on the market at the correct value," said Mr Dobner, implying that sellers are often too optimistic.

Exchanging is one way of solving problems faced by couples forced to remain under the same roof after breakdown of relationships. One woman in the Bristol area was unable to sell because her estranged husband insisted on keeping up the price so he could afford a new place. Crest Homes was able to help out by swapping the house for two smaller properties at opposite ends of an estate.

Barratt has even experimented with part-exchanges for people who need to trade down to a smaller property, handing over a cash surplus after the swap. But this is specifically aimed at "empty-nesters" whose children have left, and find they have a home far too large for their needs.

You might not get the perfect home in an exchange, and you should beware that it may also not appreciate in value as quickly as surrounding ones. But at least part-exchange will unlock the door to a move - which is all that many people are looking for.