Part exchanging for a new build - advice wanted

Wildsurf

Hi all,

We are considering part exchanging our current homes to purchase a new build property from Strata and would appreciate any advice you might be able to give.

Currently we are awaiting Strata to make an offer to us, the last valuer visited this morning. We believe our house i worth around £100k and per estate agents we have approached this is realistic.

According to Strata there are 2 plots on which part exchange is avialable for the house model we are interested in, but right now we are the only ones who have kicked off the part exchange process.

So any advice on what to watch out for, how to negotiate the best deal, how much scope there is for negotiation, general advice on pitfalls of buying a new home, anything in particular to watch out for with Strata would be gratefully appreciated.

Thank you in advance, Ben and Kelly.

Cornucopia

What proportion of the new build will they let you have in part-ex?

Wildsurf

Cornucopia wrote: »

What proportion of the new build will they let you have in part-ex?

75% and list price of the property we are interested in is £135k which I guess mean a maximum they will offer for part ex value is £101.2k

As an alternative they have suggest a guaranteed sell scheme where they help market our property but agree a price they will pay if we are unable to buy a seller. Under this they pay all estate agent fees, but I'm not sure how the guaranteed price would compare to part-ex offer.

Cornucopia

If they offer both, I would be tempted to ask for an offer under both.

I've done a couple of Part-exs in the past, it can make for a very easy transaction. Things to watch out for -

1. Undervalue of your property / overvalue of theirs.

2. Maximum proportion for Part-ex. (I've seen builders muck about with the maths to make the maximum part-ex much smaller than they advertise).

3. Selected plots - these will likely be the ones that are/will be harder to sell. Check to see what the differences are between plots that qualify for P/X and those that don't.

4. Loss of other incentives. Check to see what (carpets, etc.) you might miss out on, if you go P/X.

5. Solicitor wars - their fancy solicitor delaying things by asking your ordinary solicitor lots of potentially unnecessary supplementary questions. (I had this once, I ended up telling the P/X manager to call them off).

Wildsurf

Cornucopia wrote: »

If they offer both, I would be tempted to ask for an offer under both.

I've done a couple of Part-exs in the past, it can make for a very easy transaction. Things to watch out for -

1. Undervalue of your property / overvalue of theirs.

2. Maximum proportion for Part-ex. (I've seen builders muck about with the maths to make the maximum part-ex much smaller than they advertise).

3. Selected plots - these will likely be the ones that are/will be harder to sell. Check to see what the differences are between plots that qualify for P/X and those that don't.

4. Loss of other incentives. Check to see what (carpets, etc.) you might miss out on, if you go P/X.

5. Solicitor wars - their fancy solicitor delaying things by asking your ordinary solicitor lots of potentially unnecessary supplementary questions. (I had this once, I ended up telling the P/X manager to call them off).

Thank you all sounds like good advice on what to watch out for. Will be interesting to see what the part ex initial offer is.

Contessa

I believe that developers ask the EA's who value your house to give a likely value if it were to be sold at 12, 6 and 2 weeks. I may be slightly out on the exact time scale but a relative was very keen on doing a P/X and looked into this. New house 310k. EA's suggested marketing at 220-30k. She later found out that one of them told developer it was worth 210 (6 weeks) and 190k at 2 weeks. Developers offered her 160k. She turned them down. Her experience was very different from the developer's implied process where they said "We'll offer the market value" (based on the average of 3 EA quotes) So, to my relative the EA's were suggesting a value if no urgency, but the developers were really only interested on the value to sell asap-and even then, offering less.
Seller beware!

Wildsurf

Well they offered £93k to which we said no. They have now come back with a "final" offer of £97k which is £3k less than the minimum we can accept based on what we can afford.

I will make have one final go at getting a deal we can afford.Otherwise it is a no go and we will give it up as a bad job.

Next move might me to see if we can sell our house ourselves which would then allow us to go down the "help to buy" route.

ging84

there should be nothing stopping you going down help to buy route on a part exchange

Wildsurf

ging84 wrote: »

there should be nothing stopping you going down help to buy route on a part exchange

Except every single developer we have talked to says it is not an option and indeed the Help to Buy guidance implies this is not possible.

racing_blue

End of the day it is horse trading. How much does the developer want to sell you their home, versus how much do you want to buy it.

My strategy would be:

1. Find a new build you really like. Ideally it needs to be about 1.5 - 2x the value of your current house, and not selling quickly.

2. Visit several EAs. Get them to value your house. Talk it up, push for a high end valuation and get something in writing.

3. Go see the developer. Show them the paperwork. Say you'll pay their asking price, but want full asking price for yours in return. Willing to seal the deal today with a deposit of £1000, otherwise will look elsewhere.

4. See who blinks first!

ging84

Wildsurf wrote: »

Except every single developer we have talked to says it is not an option and indeed the Help to Buy guidance implies this is not possible.

this is interesting, i thought it was just the sale people telling tall tails about help to buy, which they seem to be very good at, the original guidance i have on help to buy which i downloaded several months back when i started my purchase states

Q Can I buy a home and part-exchange my old one with the house builder?
Yes, but the part exchange element of the sale is your responsibility and you must
comply with your lender’s requirements for redemption. All the equity available from
the part exchange must be used as a contribution to your Help to Buy purchase.

i've downloaded a more up to date one which now states

Q Can I part exchange my existing home for a Help to Buy home?
No. Part exchange is not available. House builders selling Help to Buy homes
cannot offer a part exchange sale.

i wonder why it was changed, the whole point of the scheme was to help more than just first time buyers