Buying new build from Persimmon using part exchange - any advice?

lukepugh

Me and my wife are currently looking into buying a new build house from Persimmon using their part exchange scheme.
The house we are looking at is a 3 bed detached with a garage and is listed for £174,995 which doesn't seem too overpriced for the area.
We are waiting for a valuation from Persimmon on our existing house which is a 2 bed. We have had a couple of valuations from local EA's that range from anything between £105,000 to £115,000. Persimmon use a company called "Move with Us" to get valuations before making an offer on our property, this is being done on Monday.
We have about £10,000 in savings so need to raise the rest of the deposit from the part ex. We have around £97,000 outstanding on our current Mortgage + 2% ERC meaning we need about £99,000 to clear it + another £8,000 towards our deposit.

Just wanted to know if anyone has any experience of this or any similar part exchange deals and what sort of offers they have had on their properties?

Also wanted a bit of advice on negotiating the price of the new build and getting some extras included in the deal?

Contessa

I enquired about this recently, although not with Persimmon. There was 30K difference between the highest and lowest of the 3 estate agent valuations. The information given implied that their offer would be an average of the 3 valuations. They offered me 15% less than the lowest.

GDB2222

The EA valuations are usually suggested asking price figures. They are usually optimistic, because that helps EAs get the business in. I would expect you to get 10% less that the EA valuations, ie around £95-100k.

If I understand you correctly, you need to get £107k from the sale (£99k to clear the mortgage and £8k towards the deposit). Quite frankly, it seems unlikely you would achieve that on a normal sale.

Normally, on a PX deal, the housebuilders offer significantly less than you could get on an ordinary sale. After all, they have their expenses to meet on buying it from you and selling it on, plus they will need to sell it at a rock-bottom price to clear it off their books quickly. I would therefore expect them to offer you around £85-90k on a normal PX deal.

Quite frankly, your only hope of this going through is if the new house you are buying is so over-priced that they have enough margin on it to offer you over the odds on your own house, ie the £107k you need rather than the £85-90k it's actually worth to them. Of course, your lender's surveyor may spot this and down-value the new house, so the whole deal falls apart at that stage (after you have spent a lot on fees).

You usually also have to pay full list price on these PX deals, whereas normally you can get a very healthy discount off list price.

GDB2222

Contessa wrote: »

I enquired about this recently, although not with Persimmon. There was 30K difference between the highest and lowest of the 3 estate agent valuations. The information given implied that their offer would be an average of the 3 valuations. They offered me 15% less than the lowest.

That makes sense. That gives them a few % for their expenses, and they then bung it on the market at 10% below the lowest EA quote, to sell it fairly quickly.

lukepugh

Thanks for the replies.

They are sending someone to value on Monday and expect to get a p/x offer next week. I will keep you updated.

The guy in the sales office at Persimmon seems quite positive about a deal being done, he did suggest that they may be able to offer us more on the p/x but this would mean less movement on the price of the house we are buying.

There are 2 other developers on the same site and we are considering getting p/x valuations from all 3 to see if we can play them off against each other. This may also help with negotiating on the price we pay, one of the other developers has a similar house for 5k less.

lukepugh

Contessa wrote: »

I enquired about this recently, although not with Persimmon. There was 30K difference between the highest and lowest of the 3 estate agent valuations. The information given implied that their offer would be an average of the 3 valuations. They offered me 15% less than the lowest.

Contessa, what developer was this with and were they willing to negotiate on their offer?

We need 8k - 10k more than what is left on our mortgage which is not a lot to developer but will either make or break the deal for us. We are hopeful that if the initial offer is low that we can negotiate more on the p/x instead of getting money off of the property we are buying.

GDB2222

Is any reservation fee you have paid refundable if you don't go ahead?

lukepugh

GDB2222 wrote: »

Is any reservation fee you have paid refundable if you don't go ahead?

Not committed to anything yet, waiting on valuation for the p/x to make sure we have enough of a deposit to get a mortgage.

somethingcorporate

Could you not port the mortgage to avoid the ERC?

lukepugh

somethingcorporate wrote: »

Could you not port the mortgage to avoid the ERC?

Our current mortgage is with Natwest and we are not able to raise the deposit that they require on a new build house so will have to switch to someone willing to offer 90% LTV on new builds.

lukepugh

Went back to look at the house today and also at a house built by another developer on the same site (Jelson).
Persimmon are still waiting for 1 more valuation before making an offer for the p/x but the sales manager seems to think it will be around 105,000 based on the 1st valuation. If needed then they would also give us a 5% builders deposit and still throw in some extras.

Problem is that after looking at the other house on the Jelson site we now prefer that. Same price, better build quality & a bigger garden..... But they seem less willing to negotiate a deal. They will give us a p/x price next week but if it isn't enough to cover our deposit then we won't be able to buy it.

At least we will be in a good position to push Persimmon for a good deal... Just waiting to see what Jelson will offer, fingers crossed!