If you would like to buy a new build property, but you don't want to go through the process of selling your current home on the open market, a part exchange scheme could be a good solution for you.
Part exchange schemes involve the property developer of a new build house buying your existing home and subtracting its value from the price of the new property. You are guaranteed the new house you want whilst also securing a buyer, so you could avoid months of stress and uncertainty on the open market. What's more, you can also avoid high estate agency fees.
We've compiled this handy guide to help you decide if part exchange is a good choice for you. Keep reading for everything you need to know about part exchange schemes.
How do Part Exchange Schemes Work?
Here is a breakdown of all the steps in the part exchange process:
First of all, you will need to find out if the new build property you want to buy offers a part exchange scheme. Not all do.
Next, you should check if your current home qualifies for part exchange. Some developers stipulate that your property must be worth a certain percentage of the new build's value.
Your existing home will be valued by two independent agents to give the developer a selling price.
The developer will make an offer for your property which is subject to a survey being completed. You can either accept, decline or negotiate the offer.
If you are happy with the offer and you choose to accept, you can then instruct a solicitor or conveyancer to help you manage the legal process.
You may be asked to pay a reservation fee to the developer and a deposit prior to the exchange taking place.
Is a Part Exchange Scheme the Right Choice for Me?
If you find a new build property that offers part exchange and your current house qualifies, this particular method of buying and selling may be a good option for you. Many homeowners choose to go down this route when they want to reduce the time and costs involved with selling on the open market.
To find out if your property is eligible for a part exchange scheme, check the criteria below:
Your house is in good condition. A developer is less likely to be interested in any property that won't lead to a fast house sale. If your property has structural problems, a faulty boiler, water or fire damage, problems with japanese knotweed or any other issue that would make it difficult to sell, part exchange might not be a viable option.
Your home is worth approximately 70% of the new build's sale price. If not, it probably won't be eligible.
You own the property freehold. Leasehold properties are less attractive to developers offering part exchange schemes, and if they are willing to buy one, they will only typically do so if there are at least 80 years left on the leasehold agreement.
Advantages of Part Exchange Schemes
So how might you benefit from buying and selling a house in a part exchange scheme? Here are the advantages:
No estate agent fees – Traditional estate agents typically charge a fee of up to 3% of your total sale price, so a part exchange scheme could allow you to save a lot of money.
No property chain – With a part exchange scheme, there are only two parties involved: you and the developer. This means you can avoid dealing with the risk and uncertainty of a long property chain.
The sale is guaranteed – If the developer of your dream house offers part exchange and you know your property qualifies, you can rest assured that you have a guaranteed buyer. There's no need to endure weeks and months of house viewings and trying to tell genuine buyers from time wasters.
Disadvantages of Part Exchange Schemes
While part exchange schemes can offer a relatively stress-free sale process, they do come with disadvantages:
Not achieving market value – The developer may offer to buy your current property for a much lower price than you could achieve on the open market.
The new build may lose value – The value of your new build property may drop in the years after you buy it due to the original sale price being inflated.
If the new build is worth considerably more than your current property, you might not be an eligible buyer – Part exchange won't work for homeowners looking to take a big leap up the property ladder; the chances are your current property is not worth 70% of the new build's value.
You will still need to pay solicitors' and conveyancing fees.
Remember, if your property is in a state of disrepair, a property developer is unlikely to want to buy it, so if this applies to you, selling to a fast property buyer may be a better option.
We are generally very happy to take on any property, regardless of where it is, how much it is worth, what state it is in and whether it is freehold or leasehold. So if you still want to avoid paying high estate agent fees, but your property is not eligible for a part exchange scheme, give our team at Zoom Property Buyer a call on 0333 880 436 or submit an enquiry online to discuss a fast house sale.