What is Part Exchange and How Does It Work?
Despite online estate agents changing the property industry, the majority of people still choose a traditional estate agent to sell their home. However, this doesn’t come without its pitfalls. Months on the market, chain breaks and missing out on your dream home are all issues sellers have to deal with. There is an alternative being offered by property development companies. Below, we shine a light on part exchange schemes and whether they’re good or bad for sellers.
What is a part exchange scheme?
Part exchange schemes are offered by property development companies. In the same way you might use the value of your old car against a brand-new vehicle, the same principle is applied when buying a house.
Your current home will serve as a part payment for a new build house. So, instead of liaising with an estate agent, the property development firm will take on this role. Most of the large development companies in the UK offer the part exchange scheme but terms and conditions vary between each, so make sure to conduct thorough research.
Part exchange could be a consideration if:
- You want a new build property
- You don’t want to be part of a property chain
- You require a guaranteed sale
- You have a timeframe to meet
How does a part exchange scheme work?
When you chose the part exchange route, you will negotiate with the buyer of your current home, who also happens to be the seller of your new home. The development company will simply sell your home on following completion.
Developers claim they will offer you a fair price on your current home. However, it is worth remembering that development companies want to make a profit through the part exchange scheme, so expect a realistic valuation under market value. If you desire a new build property, this may be a drop you are willing to take.
Below is a breakdown of a typical part exchange scheme process:
- You find a development where you’d like to live that offers part exchange
- Is there a property on this development you can afford and would like to buy?
- You may be asked to pay a reservation fee
- If yes, the developers will seek an independent valuation of your current home
- The developer will make you an offer to part exchange your home (subject to a property survey)
- Do you want to accept the offer?
- If yes, you will need to arrange a mortgage on the new build house you will be buying
- If all the monies and legalities are in order you will complete and move in
Will I need a solicitor?
Even though you won’t be dealing with an estate agent you will still need a solicitor or conveyancer to help you progress your part exchange as you are selling a home and buying a new property. Your development company may suggest somebody they use reguarly who is an expert with part exchange schemes. However, you are within your right to source your own solicitor or conveyancer too.
How much does a part exchange cost?
It is no secret that selling your house can be expensive, particularly if you opt to use a traditional high street agent. With a part exchange scheme with a development company you cut out the agent’s fees, which can be between 1% and 5% on your home’s sale price. Therefore, you could be saving some serious money.
How do I know if I qualify to part exchange my home?
If you’re current home is in good condition and you can afford a new home, then you are likely eligible for part exchange. Developers want properties they can quickly sell following the exchange, so homes that require as little work as possible are ideal.
If you don’t qualify for a part exchange scheme, or it simply doesn’t appeal to you, there are other alternative ways to sell. If you want to sell your home fast but don’t fancy a new build property SOLD.CO.UK can help. We can sell your house for free in a timeframe that suits you.
As an online estate agent we offer two ways to sell your home. We can either guarantee a fast house sale by buying it from you ourselves in as little as seven days with our Custom Purchase offering. Or, we can find a cash buyer for you in 30 days or under with our Enhanced Listing service (on average it only takes us 23 days). Either way, each service is fully managed by us and you won’t need to spend a penny – we even cover your legal fees.
So, if you’re interested in selling your home without a traditional estate agent get in touch with us at SOLD.CO.UK today. Call us on 0800 566 8490 or send your enquiry to email@example.com. Otherwise, book a free valuation online today and get the ball rolling.