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Part Exchange
Part Exchange is a concept which was pioneered in this country some 30 years ago by Barratt Homes, yet many people are still unaware of the practice.
The idea is a simple one, are you interested? Of course you are ...
How does it work?
If you have found a brand new dream home on a particular development, it stands to reason that the property developer is just as keen as you are to make a reservation. To ensure that this happens quickly, the developer will buy your existing home, thereby eradicating any chains.
After 3 market valuations, they will usually offer you around 90-95% of the market value of your current home, the good news is, it's a guaranteed sale, it's usually fast, avoids the needs of estate agency and solicitors costs and some developers even offer a cash back reward to showing prospective purchasers around your property 'assisting the sale'.
Who can do it?
To be eligible you must be a homeowner who's looking to move up the housing ladder, and the house of your dreams must be a new-build property.
If you can tick these two boxes, you are well on your way to being a prime candidate for part exchange.
If you can tick these two boxes, you are well on your way to being a prime candidate for part exchange.
What happens next?
The developer will arrange at least two independent valuations of your existing home and will make you an offer based on their suggestions.
Once you agree, the development company becomes your buyer, freeing you up to put in a confirmed offer on your new home.
Estate agents will then be instructed and appointments will be made for prospective buyers.
The development company will liaise with you regarding viewings, if you are happy to show purchasers around, then great, if not they can arrange for the estate agent to have a key and deal with viewings on your behalf.
A surveyor will also be instructed to carry out a survey.
After that it is a case of setting a moving in date, boxing up your items and basking in the relief of a quick chain free move.
Once you agree, the development company becomes your buyer, freeing you up to put in a confirmed offer on your new home.
Estate agents will then be instructed and appointments will be made for prospective buyers.
The development company will liaise with you regarding viewings, if you are happy to show purchasers around, then great, if not they can arrange for the estate agent to have a key and deal with viewings on your behalf.
A surveyor will also be instructed to carry out a survey.
After that it is a case of setting a moving in date, boxing up your items and basking in the relief of a quick chain free move.
Terms and Conditions
That is part exchange in the simplest terms, but naturally there are strict regulations to be adhered to, and each developer, and quite often each development, will have its own set of rules.
The common stipulations are:-
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The value of your existing property should not exceed 70% of the value of your new house (the percentage may vary)
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Your existing property must be in good condition - anything deemed unsuitable will be highlighted in the survey, allowing you to rectify it/accept a lower offer from the developer before going ahead with the part-exchange
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Some developers will stipulate that your old and new homes are within a specific radius
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Leasehold properties must have (typically) 80 years left on the lease. If less than this then the developer will make enquiries for the cost of purchasing additional years
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A clean and tidy retention is usually held (generally around £500) to ensure that your existing home is left in a satisfactory state
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On the day of vacation an estate agent will be instructed to read all gas, electricity and water meters.
The Finances
As with everything else, of course, there can be downsides to part-exchange, you may not be happy with the amount the developer offers you. The valuation you receive is based on a 'quick sale', so it is likely to be a bit less then the full market value - but then again, there is no guarantee that you would receive the full amount from a buyer on the open market anyway!
To Conclude ...
If you're looking for a no hassle, no chain, no estate agency fees and no last minute price haggling, then part-exchange could be the option for you.
