If you are looking to buy a new build property, you may have seen information at the development offering ‘Part-Exchange’ (PX). PX is nothing new for housebuilders, it’s been around for years, but more and more developers are now offering PX to help their customers avoid unpredictable property markets, lengthy timescales, and falling throughs.
A recent article in ‘The Times’ showed that the number of housebuilders offering PX deals increased 10% from 2021 to 2022, whilst the number of individual developments offering PX increased from 444 to 507, a 14% rise.
So, what is Part-Exchange and how does it work? Here we explain the process and explore the pros and cons, so you have all the information you need if you’re looking to buy a new build property and considering using PX.
What is Part-Exchange (PX)?
Part-Exchanging a property, is very similar to when you part-exchange an old car for a new one. Instead of selling your property via the traditional estate agency route, the new-build developer buys your home directly from you, meaning you don’t have to wait to find a buyer on the open market or run the risk of your sale falling through. Once you agree your PX sale with the developer, it is guaranteed to complete, meaning you are free to move into your new property when it suits.
Depending on the price of the new build you are wanting to buy, if it’s a more expensive property you are buying, then you pay the difference between the old and new home. Or, if the new build property you are buying is cheaper, the remaining equity is released which ideal for retirees, anyone downsizing or those requiring a lump sum.
Who offers PX?
Some developers, especially those building high volumes, have a dedicated team and offer their own ‘in-house’ Part-Exchange house service. However, many smaller developers don’t have the capacity to manage it themselves, so often outsource to a reputable third-party company, such as Spring. When a developer outsources their PX it’s a win-win scenario for all involved; the developer manages their cash flow better allowing them to build more homes, and the customer sells their property without any of the usual hassle or delays. Once the transaction is complete, both parties are then free to move on.
How does PX work?
If you choose Part-Exchange with Spring, the sale is pretty much like any other house sale. But, instead of putting your house on the market and waiting for a buyer via an estate agent, Spring is the buyer.
No matter if your property is already on the market, or if you haven’t got round to listing it yet, Spring will be able to make you a PX offer. We, and most other reputable Part-Exchange schemes, work using the steps below:
- Once you have chosen your new home, the developer will take some information on the property you want to sell and forward this to Spring. Once Spring receives the information, our team will usually contact you within 24 hours.
- Our experienced Underwriting team, along with valuations from 2 independent local estate agents, will be used to value your home, along a free survey from the Royal Institution of Chartered Surveyors if required. A no-obligation offer is then made to you – there are no contracts to sign (for either party) and, if the offer doesn’t work, you simply walk away.
- If you accept the offer, the PX sale begins. And, with a choice of completion date to suit, you can relax and focus on the move ahead knowing your sale is guaranteed and won’t fall through. We also give you an extra 14 days post completion to access your old property, meaning you can move your own pace, or use the time to decorate or get carpets fitted in the new property – it’s a popular feature, especially for customers who are retiring or downsizing.
Is PX suitable for everyone?
Depending on the Part-Exchange service provider and the developer, PX can work really well for homeowners as the service removes many of the hurdles and stresses often associated with selling a property. Some developers also offer incentives to prospective customers that run alongside a PX service to seal the deal, such as a financial contribution, free carpets or garden landscaping, so make sure you talk to the team at the development and find out what’s on offer.
There are some general pros and cons to PX, so it’s important to understand a few key points:
- Certainty - PX is guaranteed, meaning no fall throughs or costly broken chains.
- Speed – PX means you can sell your home as is and complete in little as 7 days.
- Convenience – PX allows you to choose a completion date that suits the onward move.
- Valuation - PX will usually offer below market value for your property.
- Eligibility – PX isn’t suitable for all properties and depends on type, location & condition.
- Ownership - PX may not be suitable for everyone and their financial situation.
PX or not to PX, that is the question…
Part-Exchange can be a fantastic way to beat the competition and secure the keys to your dream property. It’s quick, easy, and most importantly, it’s guaranteed.
Selling a property is often cited as one of the top 10 most stressful life experiences, so if you want to remove the stress and move on a timescale to suit you, then Part-Exchange could be a great option for you, especially in a slow or turbulent market.
PX also comes into its own if you are wanting to fix a broken chain, as Spring offer a Chain Repair service, which can step in at speed to fix a broken chain if your buyer suddenly pulls out. Spring will simply buy your property, repair the chain, allowing you to carry on with your new home purchase without any further delay.
As we’ve discussed, PX isn’t suitable for everyone, and the Part-Exchange offer will depend on the property you are wanting to sell. If you want full market value, then PX might not be suitable for you. But, once you have weighed up the pros and cons, and if the trade-off between price v’s convenience, speed and a guaranteed sale is your preference, then PX could be ideal especially if there is an incentive from the developer on offer too.
Speak to the sales team on your new build development and they can put you in touch with Spring’s Part-Exchange team, or contact the Spring directly if you have any questions or need further advice on 020 8629 7877 or email: [email protected]