Part Exchange House Schemes – How Do They work?
If you’re here you’ve probably got questions about part exchanging a property. Selling a property can be fraught with uncertainty and frustrating delays, particularly if you want to sell your house fast. House chains can break, estate agents can delay, conveyancers can be a nightmare. You get the picture.
Part exchanging a house is often thought of as a more hassle free way of navigating the selling process and trading your current home for a new home that you prefer. It removes the stress of having to put your house on the open market, guarantees a buyer for your property, and speeds up the process of your sale, meaning that you can sell your house quickly.
There’s a lot to consider when you come to part exchange a house, so we’ve put together this handy guide to help guide you through the process. We’ll answer questions like what is a part exchange on a house and why would I want to do it? We’ll discuss qualification criteria, when it’s a good idea to part exchange, and we’ll give an overview of the process too. If you want to know more about part exchanging property, look no further. Read on for more information or use the menu below to navigate more easily.
- What is a part exchange on a house?
- Why part exchange on a house?
- How do I qualify exchange on a house?
- Pros and cons of part exchanging a house?
- How can I part exchange?
- Tips for part exchanging a house
What is a part exchange on a house?
People part exchange their cars all the time. Part exchanging a house isn’t that much different. Put simply, it means trading in your current house in exchange for part of the value of a new build property. Developers offer this service to speed up the sale of their new build properties. It can be an attractive option for people who aren’t prepared to go through the stress of selling on the open market, want a quick house sale, and really like the look of a particular new build. Some big developers that offer part exchange schemes on their new build properties are Taylor Wimpey, Persimmon, Redrow, and Bellway. Developers then sell the house on and use the proceeds to fund the purchase of the new build property.
Why part exchange on a house?
Part exchanging your house can be a good idea if you want to secure a new build property and avoid some of the complications associated with selling your house on the open market. Sellers who would prefer to avoid the stress of property chains and estate agents are good candidates for a part exchange. It guarantees the sale of the property and means that you can sell your house quickly. It also means that you avoid the volatility of the open market and have a fixed price guaranteed for your property.
How do I qualify for a part exchange on a house?
The rules for part exchange tend to vary depending upon which developer is offering the scheme. There are some common requirements though and so we’ve listed them here:
- Condition: your property must be in good condition and not in a state of disrepair.
Ownership: you must be listed on the deed as the owner of the property and have the right to sell the property.
- Leasehold: if your property is not a freehold then you’ll need to have a fixed term on the lease and this is normally required to be in excess of 80 years.
- Value: the property that you are putting up for part exchange should be around 65% to 70% of the market price of the new property that you are looking to purchase.
- Structural factors: if the property that is being put up for part exchange has a non standard construction, or other factors like a flat roof, then this can present a problem.
What are the pros and cons of part exchanging a house?
Part exchanging a house sounds great to some sellers and can be a really good option for those looking for a quick cash sale. There are some pitfalls to be aware of however. We’ll walk through some of the pros and cons of part exchanging here.
- Fees: you won’t be subject to the same fees and commissions that you incur when selling through a more traditional route such as an estate agent.
- Chains: you avoid the stress and uncertainty of property chains.
- New Property: you’re able to move into a brand new property with a homebuilders warranty.
- Stress: part exchanging a property is much less stressful than selling on the open market.
- Communication: you deal with the developer (and therefore buyer) directly. You won’t have to communicate with your buyer through third parties like estate agents or solicitors.
- Speed: you won’t have to wait for residents to move out of the property. Once you’re ready to move in you can get straight in.
- Price depreciation: new builds tend to depreciate more quickly in value than older properties. This puts off some lenders and can make getting a mortgage more difficult.
- Developer greed: obviously not all developers are like this, but it has been known that developers will make lowball offers on part exchanges to maximise their margins.
- Time/price trade off: given the time that it takes for a part exchange to go through, there are other more effective ways to get cash for your property. Our SmoothSale investor marketing service requires just 30 days and can achieve between 90-100% of the market value for a property.
- Regulation: check that your developer is part of The Consumer Code for New Homes. If they’re not then they’re not properly regulated and so can’t be upheld to the same professional standards as other developers.
- Uncertainty: if your property is accepted for part exchange then there’s obviously peace of mind. It’s not guaranteed however, and so there’s uncertainty around whether a property will be accepted.
How can I part exchange?
Once you’ve weighed up the pros and cons of a part exchange of your property you’re probably wondering: how does it work? The process of part exchanging a house is very similar to any other property transaction with some slight differences. We’ve given a brief overview of the key steps here.
- Finding a developer: the first step is to identify a home that you like the look of. Once you’ve found a property, you’ll need to check that the developer offers a part exchange scheme. If they do, you’re free to crack on with the rest of the steps.
- Valuation: the developer will need to value the property. To do this they’ll typically instruct two local independent agents to put together a valuation pack. They’ll ask the agent to give a selling price rather than an asking price, which will be a lower price than the one at which an agent would place the property on the open market.
- Offer: once the developer has had the valuations done on the property they’ll make you an offer. This will be subject to a survey.
- Conveyancing: if the survey assessment is passed then you’ll need to instruct a solicitor to assess the new property and work on legal particulars of the purchase.
- Exchange of contracts: you can exchange contracts in as little as four weeks if all of the above is in order. You’ll be asked to pay a 10% deposit on the new property.
- Release of funds: the last step is the release of funds, at which point you can complete the sale and go ahead and move to your new home!
Tips for part exchanging a house
If you’re set on part exchanging your home and moving into a new build property then here are some tips that you should bear in mind.
- Get independent legal advice: whilst the process should be broadly similar to a normal house sale, there are some extra contractual elements to consider. A good solicitor is invaluable to navigate this and so we suggest instructing one that you trust.
- Check the costs: before embarking on any financial transaction it’s a good idea to make sure you have a strong grasp of all of the costs involved.
- Do your due diligence: check your developers credentials and confirm that they adhere to the Consumer Code for New Homes. Make sure that the developer is registered with a home warranty body.
If you’ve gotten this far then you’ll have grasped that part exchanging your house can be a good solution to sell your house fast and secure a quick sale. Assuming your property is acceptable to the developer then it provides an alternative to selling on the open market.
If you’re looking for other means to get quick cash for your house and secure a fast sale then SmoothSale could be an option. We buy any house in any condition and in any location. Our cash house buyers service is perfect for sellers looking to sell fast. Alternatively we offer an investor marketing route to sale which can secure between 90-100% of market value for your property within 30 days. Get in touch with us today on 0800 368 8952 or get a cash offer.