Part exchange plans have gained popularity due to what many see to be a stalling housing market in London. The basic principle behind these schemes is that an owner can trade in, or part exchange their existing home to a builder. In return, the value of this home is deducted from the cost of a new property. There are several benefits to part exchange plans and it’s worth learning about them if you’re looking to sell soon. So let’s look at part exchange homes and how these plans can help you get a quick sale.
Avoiding Estate Agent Fees with Part Exchange Homes
Although there can be times when estate agents are useful, the sales process generally takes much longer. This could be an issue for those who are looking for a quick move. Another point to mention here is that using a part exchange scheme through a builder will eliminate any additional fees which are charged by estate agencies.
Good for the Buyer and the Seller
Of course, part exchange homes are appealing for builders too, as they will often sell them on at a slight profit. The sale is less likely to be delayed or fall through due to a chain. This appeal obviously also benefits you if you are selling to the builder. There may be additional room for negotiations to take place; particularly if the house is deemed valuable by a surveyor. This is also the very same reason why in bearish markets (such as during the 2012 financial year), part exchange plans grew by no less than 42 percent compared to the previous year.
An “All-or-None” Approach?
The part exchange market is big. Over £100 million pounds worth of homes are bought and sold through part exchange programmes every year. Part of their popularity comes from the ability of the property owner negotiate buying and selling prices with the builder.
It is not uncommon for builders to have the house appraised by two independent surveyors. They will then base their offer on an average of the two. The price you are offered will generally be a bit lower than an open market value. Even so, the certainty and speed could be more important, meaning you can move at a timescale you choose. However, there is an interesting point to mention here. As long as the builder can make a profit in the long run, then completing the process quickly may indeed be more important than the value that the house is sold for. In other words, the builder may be willing to take a slight “hit” on the price. They can then begin renovations and quickly place your old home on the open market.
Please note that part exchange home plans are not the only option you have. You need to be aware of any potential capital gains tax and stamp duty costs. You may be able to benefit from a Government Help to Buy scheme, though you cannot combine this with a part exchange scheme. It’s wise to refer to authoritative websites such as HM Government to learn more. While the price you receive for your old home may be slightly less, the ability to relocate in an agreeable time frame with less hassle could outweigh this concern.