How does part exchange work?

poppysarah

Was going to ask this the other day - and a post has just reminded me.


Say I have a house the EA is selling for 129k.
And I want a shiny new build for at least 169k...

What happens?
Do they have my house and I have a mortgage for 40k (on top of what's left on my own mortgage)?

And then do they re-sell my house straight away?

Debt_Free_Chick

They simply buy your house - they would be like any other buyer. However, they are unlikely to buy it for an EA's valuation (£129k in your example).

What they then do with it is up to them. They might sell it pretty soon for more or less than they paid you or they might hold it for a while

The general consensus is that you don't get market value if you PE - the buyer (the developer) is generally considered to be "doing you a favour" and the price is reduced to reflect this.


HTH

poppysarah

Thanks - so they'd probaly pay less - and then resell at the original price?

Just asking because a house I looked at said they wanted a new build and then their house was under offer, but then isn't ... and I wondered if they'd part-ex'd it

typeractive

poppysarah wrote: »

Thanks - so they'd probaly pay less - and then resell at the original price?

Hi Poppy

Not necessarily. You may very well be able to strike a good deal with them. If it's a shiny new build, they will be motivated to shift them. They're probably likely to offer you less for your property at the same time by knocking some off their asking price - thus making it a 'good deal'.

As for what they do with your property - they will probably shift that as quick as possible too, not always for the most expensive price. The house I was looking into was a part ex'd property, and the EA stated it's not necessarily who offers the most, but who can get the money the quickest! They may very well sell your house a bit cheaper - they just want the cash injection as quick as possible and it off their hands. They're more bothered about turnover of their new properties. You could be in a very good position to negotiate if you ever planned such a move.

A friend of mine is a structural engineer. He recently bought a new house from a big firm. Obviously he knows a lot about how it all works and I suspect he got a very good deal. There are properties on the same estate that are not shifting, so price reductions have happened and he was saying there was an 'exclusive' agreement to the 'type' of people allowed to buy the properties. This has now been breeched and they are selling to 'anyone' - making him and the estate concerned. He is going to kick up a fuss (not through being proud/ or a toff, but due to the nature of the agreement) and I'm pretty sure he'll know how to deal with them.

Excuse the ramble - I was just getting to my point of, if anyone was to buy a new house for part ex, make sure it's built and not just the plans you're buying from. That was his key recommendation to me for the number of constrcution companies struggling to shift houses making it difficult to be able to complete a lot of planned properties! You wouldn't want to buy something that might not get finished!

Feline_friendly

We are going through a part ex at the moment.

They offer you an amount for your house....if you agree to it then it is as if you have sold it to them, however, no money changes hands. You carry on paying you current mortgage. Once your house is completed and contracts are exchanged for the new house...they then give you a bill with the amount they are giving you for the house knocked off...so you pay the remainder.

They put your house on the market pretty much straight away after you have agreed the offer! Ours sold within 3 weeks.

As for the offer we got what we would have been left with had we sold our selves and then paid for all the EA fees and HIPs.......we just paid the solicitors fee for selling. They actually marketted at £50 less than given to us and sold £5K below that.

Our house is due for completion at the end of June...it is running on schedule without any hiccups....the survey has come back ok for the mortgage....and the rest of the plots in my road are all now reserved and due for completion by end September.

Roll on End June!

poppysarah

I'm not for buying a new build but maybe a house that's been part-ex'd.
Will give that EA a call on Monday.

(I've seen the field of new builds today there's MILLIONS of them!)
Ta all for info