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Beginners Guide to Part Exchange for Home Selling

Written by Posted On Saturday, 02 June 2018 01:40
information on part exchanging information on part exchanging

Part exchange can be a good option for homeowners who want to upgrade or move to a different location but don’t have enough money to pay for the other house. The approach is especially helpful for property owners who wish to skip the struggle of finding buyers for the current property. Basically, part exchange, also known as PX involves giving up your current home to a house builder or developer as part payment for a new home.

How Part Exchange Works

As a homeowner, the first step is to find a builder with a part exchange scheme. Most companies basically operate in the same way, but each has their own requirements and terms. Therefore, before you settle on a particular home builder, review their information on part exchanging extensively. The basic rule is that your current property must be worth the specific percentage of the new home when part exchanging. The percentage range for most companies is between 65% and 75%.

Once you have settled on a builder, the next step is to select the property that you would love to buy. The house is then reserved for you as the builder carriers out valuations for your current property. It is advisable to inquire how the value of your property is arrived at. Normally, the builder will get valuations from two agents and calculate the average. You can get an independent valuation before meeting the developer to avoid settling for a price that is significantly below market average.

Once the valuations are complete, the developer will present you with an offer and you will agree on the selling price for your current home. The balance can be paid in cash or using a mortgage. On accepting the offer, you will get a moving date.

Benefits of Part Exchange

The key benefit of using part exchange is that it allows one to dispose of the current property and get a new one without going through the complex and daunting buying and selling processes. Making your home buyer friendly, listing it for sale, meeting prospective buyers and dealing with negotiations is not only tedious but also time-consuming. Therefore, PX also reduces the amount of time you need to transition from your old to your new home. The process will be completed quickly and you will get to move to the new house in the shortest time possible.

The developer will reserve the house for you so that you don’t miss out on what you want. If you put your property on the open market, by the time it sells, the house you were eyeing may have sold. Additionally, prices keep on fluctuating and thus you may end up paying a higher price. Therefore, PX is an advantage in cases where you are eyeing a specific property.

Another key benefit of part exchange is that you can be allowed to choose the fittings for your new home. This will save you major renovation costs in the future. In cases where you didn’t choose a house that’s ready, you will be allowed to stay at your old one until the new one is complete.

With part exchange, you also get to save on estate agent fees. You won’t have to pay an expert to sell your house and find a new one for you. The process of finding a reputable agent in your area can also be time-consuming.

Part exchanging gives you a guaranteed buyer for your old house. There are many cases where you find a potential buyer for a property and then they change their mind at the last minute. With PX, you will eliminate such last minute inconveniences.

Finally, some developers offer removals as part of the PX contract. Packing and unpacking are among the most stressful tasks when moving to a new house. You will get expert movers to pack your stuff, transport them to the new house and unpack. However, not all companies offer this package so check the extras when reviewing the terms.

When Part Exchange is Ideal

Part exchanging is most ideal when you are eyeing a specific property and when you need to move fast, or in cases where you don’t want to deal with estate agents and home buyers. Note that the offer you get from the builder may be lower than the market value of the property. However, the little difference is worth it considering the convenience and speed of the process.

Nevertheless, homeowners should evaluate their options when choosing between part exchange and selling separately. Weigh the cons and pros of each, comparing both the monetary and non-monetary value and choose what works best for you and your family.

Key Tips to Remember When Closing Part Exchange Deals

The first tip is to ensure you negotiate both the value of your current property as well as the price of the new home. Check whether the builder allows negotiations before you start working with them. Don’t make the mistake of accepting the first offer that is presented to you. PX is a good deal but you shouldn’t have to pay too much for your new house just for convenience.

Secondly, ensure you read the entire part exchange contract before appending your signature. Check all the fine details to know what you are getting into. Note that if you back out of the deal, there may be a huge penalty and thus check every detail before you make up your mind.

Thirdly, unless you are sure you can sell your property by yourself, avoid listing it for sale. This is because when an agent is valuing your property, they will check how long it has been on the market. If the listing has been up for months with no sale, the property will be down-valued.

Most importantly, choose a house builder carefully. Do some research on their operations and check whether their offers are fair. Read reviews from other home buyers before you start engaging them.

Drawbacks of Part Exchange

The key drawback of part exchanging is that not all homes qualify for the schemes. Builders want to be sure that the properties they are taking will sell for a good value. A home can be disqualified because of the location and structural defects. Another reason a home may not qualify is when its value doesn’t meet the specified percentage of the new home.

Part Exchange and Downsizing

PX isn’t only for people who are looking to upgrade. Most developers are willing to tailor packages for homeowners who want to downsize and move to a smaller house. Downsizing is an ideal option for retirees looking for smaller spaces that are easier to maintain. With part exchange, seniors can escape the stresses of renovating to sell, hiring agents and showing their house. Homeowners may also downsize when the kids move out and if finances are tight, or even after a divorce.

Part exchanging is growing in popularity, especially in areas where homeowners want to reserve houses in a specific place. The homeowners get the advantage of convenience, speedy transactions and less hassle whereas house builders get to sell their new-build houses fast. It is a good approach for a speedy move but you have to work with a good house builder for you to get maximum benefits.

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