You’ve probably heard of part exchange with cars.
But did you know that a similar initiative exists for many properties, too?
With the right information, you can decide whether a part exchange for your house would be valuable and how to make it happen.
Keep reading to find out.
What is part exchange?
Part exchange is when you trade some (or all) of the value of your current property to buy a new house from a developer.
In this scenario, the private developer usually takes the place of an estate agent, meaning that you will be dealing with them instead of an estate agent.
Some homeowners see part exchange as a valuable way to avoid the uncertainty of long property chains and increase the likelihood of sales completing.
This is especially worth considering if you are interested in a new build property.
How does part exchange work?
Only a select number of private developers offer part exchange schemes, so you need to find an organisation that does and contact it.
It is equally essential that the developer has new builds in the area that are applicable.
You should ask for a list of everything they have so you can find one that catches your eye. If you find one, you may be asked to pay a reservation fee.
The developer will visit your house to provide an accurate valuation. It is up to you whether you accept this deal.
Most people choose to haggle and negotiate on this figure if they can. Typically, you will receive below the market value for your house.
If you accept the offer, you must arrange a mortgage on the new build house you will be buying. Once everything is in order, you can then complete and move in.
Do I need a solicitor for a part exchange?
Yes, you should pay a solicitor to support you unless you have prior legal experience yourself.
During part exchange, you are both buying and selling a house simultaneously.
This involves much of the same paperwork as any other property transaction, meaning that a legal expert must carry out these processes.
Some developers may offer to cover this cost for you, but it will usually coincide with a lower offer.
They sometimes recommend solicitors of their own, which you are perfectly free to use, but you can also bring in your own professional if you wish.
Conveyancers will usually be sufficient to support you with part exchange, too.
Do all new build developers offer part exchange?
No, not all new build developers offer part exchange, but recent figures suggest that the number of organisations providing this is rising.
In a recent calendar year, housebuilders offering part exchange deals increased from 150 to 165.
However, even if you find a developer that offers this initiative, it doesn’t guarantee they have any new builds you’re interested in moving into.
Therefore, you should research both aspects of this deal to ensure you’re getting a great deal. This applies to both when you are selling and buying.
Where are most new build properties being developed?
There are plenty of websites that enable you to filter by this feature to find new-build properties in your area.
This includes Rightmove, Zoopla, OnTheMarket.com, amongst others.
If you see a new construction project taking place near you, it is worth speaking to the site manager and asking for details about the project and any others the company has in the area.
According to reports, London and the Home Counties are the UK areas receiving the highest quantity of new construction. These commuter towns are ideal for those working in the capital city.
Generally speaking, urban areas receive the most residential development.
It can also be influenced by where major developers consider there to be a ‘blossoming market’ on which they can capitalise.
Some of the largest developing companies include Berkeley Group, Barratt Developments, and Taylor Wimpey, among many others.
You may want to visit these websites for further details on where they are building properties.
Do I qualify for part exchange?
Each private developer has its own terms and conditions for part exchange. You should contact them directly to confirm whether your circumstances are applicable.
For example, according to the Taylor Wimpey website, if the value of your current home is no more than 70% of the value of the new home you have chosen, you could part exchange it.
Pros and cons of part exchange
Pros
With part exchanges, you can avoid estate agents’ commission charges because they are not usually involved in the sale.
This usually equates to several thousands of pounds, which may cancel out some of the reduced offers that you receive from the private developer.
Part exchange transactions are often completed faster than a typical house sale timeframe.
They are also arguably less stressful because you are not dealing with a long chain of buyers and aren’t nervous that it could fall apart at any moment.
Thirdly, and perhaps most importantly, you can stay in your current property until your new house is ready.
This removes the risk of being without a place to stay for a while or having to move in with family or friends.
Cons
On the other hand, selling your house through a part exchange initiative means you will receive below the market value for your property.
Your negotiating power is reduced as you get another house as part of the deal, so you may find it difficult to raise the price above the initial offer they make.
There may be limited options on new build houses that you can move into. If you don’t like this style of property – or cannot find a house that meets all your desires – then this can put you in a difficult position.
There are also additional costs to consider. In most cases, you will pay a new build premium when purchasing your new house. It is also recommended that you pay for a snagging survey.
Should I do a part exchange?
The answer to this question is mainly affected by the range of new build homes on offer for you to choose from.
Some private developers have a wide variety of properties, some of which you may love – in which case, getting a no-obligation valuation is worthwhile.
On the other hand, you shouldn’t force a deal when you don’t like any of the new build options.
If your priority is completing the sale and getting cash for your house quickly, then a cash-buying company may be the solution for you.
