Part exchanging your home is a great way to buy a newly built house without having to put your current house on the market through an estate agent.
In this article, we’ll explain how do part exchange houses work, what part exchanging is, for whom it’s an excellent option, and what you can expect from a part exchange scheme.
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What is a Part Exchange house scheme?
A part-exchange new build scheme is ideal for those looking to move quickly and with minimum stress. The scheme works by the property developer buying your existing house and subtracting its value from the cost of your new home.
This allows you to part-pay for the newly built property without having to go through the arduous process of selling on the property market. A part exchange is an excellent way to move quickly and hassle-free.
However, you will end up paying a premium for a newly built house, and your own home could be downvalued by the developer.
When is part exchange suitable?
Part-exchanging is an ideal solution for those looking to purchase a brand-new home. The developer will purchase your existing property and deduct that value from the cost of the new build.
This is advantageous for the developer, as they are guaranteed a buyer for one of their new builds, while you benefit from an effortless sale and transition into a new home.
How does Part Exchange work?
Exchanging your existing property for a new build works much like a traditional property sale, the only difference being that your buyer is the developer.
Here is a step-by-step guide to help you through the process.
- Start by finding a new property development and a house you like, and check to make sure that they offer part exchange.
- Your current home will then be valued. Most developers usually ask for two valuations from independent agents and will require a selling price, not an asking price.
- The developer will then make you an offer contingent upon a survey.
- If you accept the offer, you can then go ahead and arrange your mortgage if you haven’t already done so.
- Next, have a conveyancing solicitor assess the new property.
- If the developer requires it, pay a reservation fee.
- If the assessment is successful, contracts may be exchanged within four weeks.
- When contracts are exchanged, you may be asked to pay a 10% deposit. Your solicitor will hold a portion of this.
Once the money is released, you can complete the sale.
Moving into your new home
The final step is, of course, moving into your new home. But, how long does it take to complete a house sale through part exchange?
It’s hard to give an exact timeframe because each developer has their own. However, since you’re not putting your house on the market, you can expect to move much faster than if you sold it the traditional way.
What are the rules for Part Exchange schemes? And who is eligible?
If you’re looking to part exchange your house for a new build, it’s important to check the rules of the house developer you’re working with. To be eligible for part exchange, you must:
- Own a home which you can sell
- Have your existing property worth between 65-75% of the asking price of the new one
- Ensure that it’s in good condition and structurally sound
- If it’s leasehold, have a fixed term of at least 80 years left
- The property’s location and saleability will be taken into consideration
- Some homes may be excluded, such as those with flat roofs
Part exchange is a great option for those who are on the move up the property ladder and want to avoid the unpredictability of a house chain. It’s not the best choice for those who are downsizing, as their current home is usually worth more than the new property.
Is Part Exchanging your home a good idea?
Pros
- You can avoid the open market, no estate agency fees, and no unpredictable chains.
- No constant viewing appointments and a guaranteed sale make the process less stressful.
Cons
- You may receive 20% less than the market value for your current home, you may not be able to negotiate discounts on the new home, and your current house must be worth around 70% of the new property’s value.
- Short lease properties and leasehold flats are less attractive, and new builds can have smaller rooms and drives than older properties.
- The premium price of a new build can make it difficult for buyers to get a mortgage, and it can be trickier to re-sell once the developer is still promoting similar builds in the area.
The right questions to ask a developer
It can be difficult to anticipate every obstacle you may encounter when buying and exchanging a house from a developer. However, being prepared with the right questions will go a long way in helping you make informed decisions.
Here are some things to think about:
- What costs are included in the part exchange scheme?
- What is the highest figure the developer will accept for a part exchange property?
- Do they comply with the Consumer Code for New Homes?
- Are there any fees if I change my mind after agreeing to part exchange?
- Can I negotiate the price of the new property?
- How quickly can the house sale be completed? Can I negotiate extras such as carpets, fitted wardrobes, etc.?
Part exchanging your property is a great option if you want to move quickly, avoid the hassle of estate agents and don’t want to be caught up in a property chain.
However, there is no guarantee that your property is eligible. To avoid a lengthy sales process or negotiations, why not consider a quick house sale company like Property Saviour?
At Property Saviour, we will make an offer for your home up to 70% of its market value, regardless of the condition and lease length. There are no seller’s fees, and we are the only regulated quick sale company.
Get in touch with Property Saviour’s expert surveyors for a fast and convenient sale.
Looking for An Alternative To Part Exchange Scheme?
By selling your home us, you become a cash buyer and, therefore, will be able to negotiate a better discount. Here are some of the reasons sellers trust us:
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
