Part exchange deals with new developers
Discussion
Anyone have any experience of doing a Part Ex on a new build?
Do they give you a decent price of for your current house? is it much below market value (i assume they do)?
I'm assuming you pay for the fact that its easy to do and hassle free (no estate agents / fee's etc...) but is it at too much of a cost?
Any experience would be appreciated
Thanks
Do they give you a decent price of for your current house? is it much below market value (i assume they do)?
I'm assuming you pay for the fact that its easy to do and hassle free (no estate agents / fee's etc...) but is it at too much of a cost?
Any experience would be appreciated
Thanks
I don't know a great deal but I've have in the past been told that if you approach some of the bigger developers towards the end of their financial year they can be quite reasonable with their part exchange.
The reason being that they will need to report to their shareholders and one thing they will report is the number of units sold and doesn't take the part exchange properties into consideration.
This may have changed in recent times with investors taking more interest in what is actually happening.
The reason being that they will need to report to their shareholders and one thing they will report is the number of units sold and doesn't take the part exchange properties into consideration.
This may have changed in recent times with investors taking more interest in what is actually happening.
Don't expect market value for your property, so haggle as hard as you can to get either things "thrown in" or money off the top. I got a reasonable "discount" and the stamp-duty paid.
Also, the developer I p'exd with would only offer you up to 70% of the value of their property. Other developers may have similar conditions. You also may have to leave certain fixtures in your old property - I had to leave the kitchen appliances (fair enough as they were fitted), the curtains and curtain poles!
I accepted about 18% less than what I had previously agreed in a private sale (which had fallen through). However, the developer eventually sold my old home for less than they paid me (as the market was falling). Therefore, as I wanted to move I think I did well to get rid when I did (I moved from 1-bed flat to 3-bed semi) as it would have cost me far more if I'd persisted with attempting to sell my flat.
Overall, whilst it was not a completely hassle-free experience, it was far easier than being in a chain - you know that your purchase is not dependent on your "sale", there are few disrupting factors at play. As long as you are prepared to pay the price - I was, and a friend of mine in (fairly) similar circumstances also did ok on part-ex.
I would do it again.
Also, the developer I p'exd with would only offer you up to 70% of the value of their property. Other developers may have similar conditions. You also may have to leave certain fixtures in your old property - I had to leave the kitchen appliances (fair enough as they were fitted), the curtains and curtain poles!
I accepted about 18% less than what I had previously agreed in a private sale (which had fallen through). However, the developer eventually sold my old home for less than they paid me (as the market was falling). Therefore, as I wanted to move I think I did well to get rid when I did (I moved from 1-bed flat to 3-bed semi) as it would have cost me far more if I'd persisted with attempting to sell my flat.
Overall, whilst it was not a completely hassle-free experience, it was far easier than being in a chain - you know that your purchase is not dependent on your "sale", there are few disrupting factors at play. As long as you are prepared to pay the price - I was, and a friend of mine in (fairly) similar circumstances also did ok on part-ex.
I would do it again.
Maybe I can enlighten you a bit on this. For the last 15 years or so I have been a Director of 3 firms of National Housebuilders, that are in the top 5 housebuilders in terms of volume and profit. For the last 2 years I have been at Managing Director level.
I have sat in and chaired many business planning and sales meetings where this has been discussed and as a rule the following applies:
If the builder has spare part exchange budget the price offerred us usually the average of 2 or 3 estate agents valuations, ie the market price. (This is because part ex's properties are accounted for differently and by taking a part ex it releases the profit element in the new house, even if the cash flow will be delayed)
If the builder is near the limit of his part ex budget, has too much stock or has a site that is selling very well, then maybe they will try and offer you less, but this is rare. (You will not find it easy to research the developers part ex position unless you have a helpful sales girl on site who talks too much. If she is an agency sales girl she won't know much anyway)
If it is the developers year end you will get a better deal if you can complete by the year end
At the moment all developers need to shift stock, if the site is a couple of years old (from acquisition) then you can be fairly certain that the developers margins are nil or non existant, this will probably result in a lower price for your part exchange.
If it is one of the last property on the development then you should get a better deal as the developer can see a way of saving marketing costs.
In summary, its never cut and dried, but as a rule you should be able to get market value. But if your property is in a merket or location that is very vulnerable to a depressed property market then the developer may offer a bit less to mitigate his risk.
I hope this helps
If you want to PM me and tell me who the developer is, I may know a bit more aboput their likely strategy
I have sat in and chaired many business planning and sales meetings where this has been discussed and as a rule the following applies:
If the builder has spare part exchange budget the price offerred us usually the average of 2 or 3 estate agents valuations, ie the market price. (This is because part ex's properties are accounted for differently and by taking a part ex it releases the profit element in the new house, even if the cash flow will be delayed)
If the builder is near the limit of his part ex budget, has too much stock or has a site that is selling very well, then maybe they will try and offer you less, but this is rare. (You will not find it easy to research the developers part ex position unless you have a helpful sales girl on site who talks too much. If she is an agency sales girl she won't know much anyway)
If it is the developers year end you will get a better deal if you can complete by the year end
At the moment all developers need to shift stock, if the site is a couple of years old (from acquisition) then you can be fairly certain that the developers margins are nil or non existant, this will probably result in a lower price for your part exchange.
If it is one of the last property on the development then you should get a better deal as the developer can see a way of saving marketing costs.
In summary, its never cut and dried, but as a rule you should be able to get market value. But if your property is in a merket or location that is very vulnerable to a depressed property market then the developer may offer a bit less to mitigate his risk.
I hope this helps
If you want to PM me and tell me who the developer is, I may know a bit more aboput their likely strategy
I part exchanged my first house when moving to a new build house.
Old house was valued at 100k. Developer offered 93k. Given that I was spared trying to sell my house and estate agents fees, plus the hassle of buyers coming round - I thought it was a good deal.
I also managed to knock 20% off the price of a 4 bed semi by looking into their build phases. They were building in "blocks" and didn't want to start a new block until they sold all the existing houses. Two were left when I bought mine. A lot of the extras are quite poor quality, carpets etc are bargain basement stuff. Try to haggle cash rather than extras. Bloke next door knocked 15% off the price of his house and had carpets throughout thrown in - cheap looking stuff. Extra 5% I had knocked off is worth a lot more than his carpets!
Oh, and they paid the stamp duty on my house as well, worth mentioning that.
Old house was valued at 100k. Developer offered 93k. Given that I was spared trying to sell my house and estate agents fees, plus the hassle of buyers coming round - I thought it was a good deal.
I also managed to knock 20% off the price of a 4 bed semi by looking into their build phases. They were building in "blocks" and didn't want to start a new block until they sold all the existing houses. Two were left when I bought mine. A lot of the extras are quite poor quality, carpets etc are bargain basement stuff. Try to haggle cash rather than extras. Bloke next door knocked 15% off the price of his house and had carpets throughout thrown in - cheap looking stuff. Extra 5% I had knocked off is worth a lot more than his carpets!
Oh, and they paid the stamp duty on my house as well, worth mentioning that.
Thank you again guys very much for taking the time to reply. Particulary blueg, that's a very interesting perspective. It's early days at the moment but an option for us, if we go down that route I'll take you up on your extra info when we know who it might be if that's ok?
Thanks again
Thanks again
KingJeff 4th said:
Thank you again guys very much for taking the time to reply. Particulary blueg, that's a very interesting perspective. It's early days at the moment but an option for us, if we go down that route I'll take you up on your extra info when we know who it might be if that's ok?
Thanks again
No worries, happy to helpThanks again
Just double check that they will accept your property in part ex. A lot of the firms have tightened their criteria, so reducing the maximum age of property they will accept, not taking leasehold property etc. If you can get it at the right price then it will make it a less stressful move as the developers will want to make it as smooth as possible.
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