how does part exchange work?

Lolliloo · 1 May 2011 at 12:29AM

please can someone explain how this works please?

pawlala · 1 May 2011 at 11:25AM

Typically, schemes work whereby the house you own is valued (usually by two or three independent estate agents) and if you are agreeable to the price offered, the housebuilder buys it off you, which enables you to move into their brand new home immediately (subject to build completion). Each housebuilder may operate their scheme slightly differently, for example most insist it only applies to people who are 'trading-up' – in other words, who are buying a new home costing more than the value of their existing property.

This was popular in the days when house prices were going up all the time .. Now it's a way for developers to shift their new houses without making it look like they had to reduce the price...

They agree a valuation on your old house. You get a new house (and new Mortgage), pay off the old Mortgage and hand over the old house to the developer (who then sells it or keep it 'on their books' until house prices 'recover' ). It can work OK if you have tried and failed to sell at the price they agree .. however more often they will push down the valuation on your old home and artificially inflate the value of the new one.

Most often I would suggest you are better off negotiating a discount on the new house and selling the old yourself.

sw67 · 1 May 2011 at 11:32AM

I looked at this using 3 Builders in my area ( 3 nat builders )

1. There needs to be a 30% difference in value

2. They will make you an offer of about 95% of the ave valuation

3. You will pay full asking for the new house - we were told to sell and come back and they would then have a £15k incentive fund to play with

iangoodie · 1 May 2011 at 11:30PM

we have just done a part exchange for a new build (contracts exchanged and complete in a few weeks) - we got a good deal

we agreed to sell my house for what wass left on the mortgage (i was one of the daft ones who bought at the peak of the market for a house over valued - this was for 106k and the nearest house on the market on my street has not sold for 92k and been on the market for 6 months)

they had the new buidl on at 210k but we managed to get for around 190k. we have been very lucky!

they will always look at doing a deal esp if they like you, you keep on at them and also if you are honest with them about what you can/cannot afford.

dorme · 2 May 2011 at 9:01AM

so do you get the money from your old property so you can pay off your old mortgage or do they just take the price off the new house? if so, how would you be able to get a new place?!

pawlala · 3 May 2011 at 10:22AM

You will get (or not as the case may be) a mortgage for the difference in price between the new and old property (taking into account any existing equity of course).

dorme · 3 May 2011 at 11:50AM

so how would you clear down your old mortgage? add the old amount to the new mortgage, thus reverting the new mortgage to the full new property price in total?

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how does part exchange work?

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