Despite soaring inflation and the cost of living crisis, as of summer 2022, buyer demand shows no sign of waning.
However, the house sale process is taking longer than ever before as conveyancers and local authorities struggle to keep up with the sheer volume of transactions. And one in three house sales falls through before completion, at least partially due to down valuations, which have affected nearly half of UK property transactions during the pandemic.
Frustrated homeowners need a quick and easy way to sell and buy. Housebuilders and developers can offer house part exchange schemes to help their customers move more quickly.
Do your customers keep getting caught up in a slow-moving chain or falling victim to a chain collapse? Are you struggling to find a hassle-free transition that will keep your clients happy and your business growing? If you are a builder, developer or estate agent, you can offer your clients the convenience of a part exchange to remedy these concerns.
Part exchange, or PX, is a great way to help your customers buy their new homes without the stress and uncertainty of selling their existing properties in the volatile UK housing market. This allows them a swift move and enables you to continue growing your business while delivering a first-class customer experience.
What does part exchange mean when buying a house?
Part exchanging a house is similar to part exchanging a car. The customer agrees to a sale price for their existing house with the developer, and that value is then deducted from the cost of the new house. The customer then pays the remaining difference.
Selling through a part exchange scheme is ideal for customers who have hard-to-sell properties such as those that need a large amount of work or have damage. PX schemes are also a practical option for customers looking to repair a broken property chain or simply don’t want to sell their homes on the open market. Acceptance into the scheme isn’t guaranteed and depends on the property’s location and condition, but it can offer a quick sale option for customers and guarantee their sale will go through.
Some developers have their own in-house part exchange scheme while others outsource this service to a part exchange specialist like HBB Solutions.
Benefits of property part exchange schemes for builders and developers
There are several benefits of using house PX, including:
- Helping your customers buy and sell their homes in one easy transaction
- Keeping your funds free so they aren’t tied up in managing stocks
- Helping customers avoid estate agency fees
- Meeting deadlines and managing project timelines more effectively
- Getting a fair value for your customers’ current home
- Helping customers move to their new homes quicker and with far less hassle
- Giving your customers a guaranteed sale
- Delivering an exceptional customer experience
Who can benefit from a house part exchange?
Any homeowner looking to sell their existing home and buy a new-build property can take advantage of house part exchange schemes — whether they are looking to expand their family and need a bigger home, need to downsize for their retirement or just want a change of scenery.
Home exchange schemes can help your customers move into their dream homes quickly and efficiently, leaving them happy and allowing your business to grow.
Who is eligible?
For customers to be eligible for a new build part exchange scheme, they need to meet the following criteria:
- They must fully own the home they wish to sell
- If the builder is using an in-house scheme then the existing property should be worth around 60 to 85% of the asking price of the new home they wish to buy. If the builder is working with a specialist part exchange partner then this limitation is unlikely to exist.
- The home they wish to sell needs to be structurally sound and in good condition.
- If the property is leasehold, it needs to be a fixed-term, usually with 80 years or more left on the lease. If you are selling a property with a short lease then you could explore extending that lease to make your house more sellable.
- The home must be in an appropriate location
- The home must be of a standard building design, as uncommon or odd building designs may be rejected.
- If the house builder is working with a specialist partner then these limitations may not apply. Specialist PX providers will buy any property in any condition and location.
If you want to find out more about which of your clients can benefit from PX, contact our team of experts for an informal discussion. We can help you explain the process to your clients or work behind the scenes to keep things running smoothly.
How do home part exchange schemes work?
House part exchange schemes work much like a regular home sale, however, the customer uses their existing property as a partial payment for their new home that you’re selling. A company such as HBB Solutions then buys their old house from you.
The scheme makes the whole process much quicker, allows you to make a sale more quickly and helps the customer move into their new home much sooner.
Typical house part exchange schemes work like this:
- The customer wants to buy one of your new homes and contacts you about the possibility of part exchange.
- The developer contacts HBB Solutions, and we do extensive desktop research into the property and local market, including getting the opinion of local estate agents who know the area best. We typically request two or more valuations.
- HBB Solutions then provide you the developer with our offer so you can present it to your customer (our offers are subject to a survey and legal checks). This lets you consider whether you want to ‘top up’ HBB’s offer or include any other incentives in the transaction.
- The customer can then decide if they wish to accept your offer. If happy, they can plan for their mortgage on the new home.
- Once accepted, the process follows a normal house sale – survey, legal checks etc. As HBB Solutions is an experienced buyer working with specialist surveyors and lawyers, we can complete this activity as quickly as you and the customer need us to.
- Contracts can be exchanged in as little as a week, and completion dates can be set to suit you and your customer.
- We can include a “license to occupy” in our offer, which lets the customer stay in their existing house for up to 2 weeks post-sale. This can help them plan their move into their new home in a less stressful way.
Completing house part exchange schemes is fairly straightforward and designed to reduce the amount of paperwork, stress and uncertainty of a normal house sale. It can also help you and your customers avoid a broken house chain.
Take the first step by completing our simple online form today.
How common is house part exchange?
Part exchange housing schemes are becoming more and more common, and popular with homeowners. This rise in popularity is mainly due to builders and developers selling homes to more “second steppers” and retirees looking to downsize.
In areas of the country where house prices haven’t increased significantly in recent years, and equity is low, part exchange housing has flourished — helping people upsize their homes.
What are the pros and cons of house part exchanges?
Whether PX is a good idea for your customer depends on their circumstances. Before suggesting this option, it’s worth considering the pros and cons of house part exchange schemes from both a property development and customer perspective.
Pros:
- They’ll avoid the stress of selling on the open market.
- There won’t be any estate agents’ fees or broken house chains.
- Customers won’t have any time-consuming house viewings.
- There’s far less hassle and stress and wasted time and money.
- As a developer, you get the confidence that you can move ahead with your property development plans according to your preferred schedule.
- Both parties get peace of mind knowing the sale of the old property is completely under control.
- There’s no risk of a sale falling through.
- Developers can save money with HBB Solutions’ commission-free part exchange.
- You can attract more potential buyers to your building services by letting others know you offer PX.
Cons:
- Your customers may be offered 10% less than the market value for their existing homes – but you, as the developer, may want to add a ‘top up’ to incentivise your customer to sell.
- Not every person and property is eligible (particularly true for in-house schemes, but less common when working with an outsourced specialist).
- The customers’ current homes must be worth at least 65% of the valuation of the new home (only the case for in-house schemes, not outsourced ones).
- Short-lease properties may be denied.
How house part exchange schemes can boost your business
If the housing market does see a decline in buyer demand, builders and developers will need to offer more value to attract new customers. If demand remains high, there will be lots of homeowners eager to sell their homes fast so that they can beat the competition to snap up their dream new build home. Either way, housebuilders’ part exchange schemes can help keep business flowing in.
House part exchange is an added service that not all home builders and developers offer. New customers with a property to sell will be more likely to buy from you if they can sell and buy in one easy transaction.
By offering part exchange, you will be able to attract more new customers, close more sales and avoid tying up your own capital in existing stock, no matter how challenging the economic climate becomes this year.
Property part exchange schemes: the bottom line
House part exchange schemes are great for developers or builders that want to help their customers sell their existing houses and move into new homes as quickly as possible. Part exchange will help you and your customers avoid the unwanted delays or costs that commonly occur with regular house sales, such as broken house chains, expensive agency fees and the uncertainty of a sale.
Part exchange allows you to keep your customers happy while simultaneously growing your business. If any of your customers need a quick and smooth sale of their property, part exchange could be the best answer. Both builders and developers can benefit from offering a PX scheme to their customers.
Outsourcing your house part exchange scheme to an expert provider can help increase your value to existing customers or potential new clients. House part exchange schemes give you more control over meeting deadlines and greater freedom to arrange the timeframes of your various projects.
If you are interested in offering part exchange housing for your customers, contact HBB Solutions today at 01509 680 065, or email us at hello@hbbsolutions.co.uk to speak with our professional staff.
There’s no need to worry about the price difference when choosing PX from HBB Solutions. We’ll still purchase a property from your buyer even if they’re downsizing to a smaller house of lesser value…..