Purchasing new home: part-exchanging existing property with developer

pawlala

Has anyone has any experience of part-exchanging their existing home in order to move into a new build? Are their valuations fair? What conditions of sale have you come across?

Looking at a few but so far put off by having to pay reservation fee before surveys and valuations of current abode.

Thanks!

Doozergirl

Are you confident of your own valuation of your house? If you know it's fair then I would expect that the developer will pay that price as long as you don't expect much negotiation on the house you want.

They are pretty fair, considering they have extra expense involved with selling yours on so you have to appreciate that you are paying for that privilege of passing on your own 'problem'. They won't fleece you on the price of yours but you just won't be finding a bargain.

SuperFly_3

Depends entirely on what you consider 'fair'.

If you're looking to sell privately, most (all?) agents will give you an overinflated valuation to try to convince you to come on market with them. Unfortunately, people tend to think these valuations are genuinely indicative of achievable sale price, which just isn't true - agents are desperate to win your business! When they do get your property on the market, you'll quickly get the inevitable requests for a drop in price.

When you get into a PX, most builders will have 2 or 3 appraisals done with a mind to a quick sale price (within a couple of weeks) based on current market. These figures will inevitably be lower than a private sale valuation - but the reason for this is that they are actually realistic.

The builder will usually take the two lowest figures obtained, average them and drop 10% or so off - that is what you'll be offered, so do be prepared for that. This is driven by the fact that they are taking the hassle out for you, and also from the fact that they will look to sell your existing property as quickly as humanly possible - in the current market that's no easy feat!

Most builders have a pot of money available for PX's - as they buy in to new properties, this pot is depleted - if those they have bought into sell, the pot is topped up. If they can't get your property at a price that means they can shift it fast and top the pot back up, then there's not that much point them bothering - they need to free up cash for other PX's!

One thing to bare in mind, most new builds are largely overvalued when first completed - bare this in mind if you do go ahead with a PX as you may find the completed new build is not worth anything close to what you expect.

pawlala

thanks for the advice!