Updated June 2022
Despite the COVID-19 pandemic wreaking havoc on the economy and multiple “lockdowns” with restrictions imposed on business activity, the past 18 months have been a prosperous period for many businesses in the property sector. The housing market has boomed, with house sales and prices soaring after the first lockdown and remaining buoyant since.
However, most major housebuilders felt compelled to shut down their sites in March 2020 to ensure their workers’ safety, despite the government allowing them to remain open. As a result, COVID-19 had a significant impact on the construction industry in the first half of the year. Research by CHAS found that more than a third of the 900 construction business owners surveyed reported a drop in turnover of up to 20%, and over 40% were forced to cease operations at some point during the year due to the pandemic.
Housebuilders will be looking to replenish their coffers in 2022 to make up for the shortfall in profits during periods of shutdown. Supply chain problems continue to plague the industry, making it difficult for housebuilders, especially small to medium-sized, to keep on track with development plans. And while there is no immediate house price crash forecast, most industry experts predict that sales will gradually slow as 2022 progresses.
Part-exchange (PX) services can help you drum up enough business to stay productive, even in an unproductive market.
In this post, we will review eight ways PX can benefit you as a house builder or seller. But first, let’s take a brief look at how part-exchange schemes work.
How Do House Part-Exchange Schemes Work?
PX schemes allow your customers to buy and sell in one swift, hassle-free transaction. If your customer needs to sell their current home before they can buy your new build property, PX can help you secure the sale fast.
At HBB Solutions, we have made the process as simple as possible for you and your customer. We can manage the whole process, leaving you to focus on building houses and attracting new customers. Here’s how it works:
- Fill out an Offer Request Form with your customer and send it to us.
- We arrange a valuation of your customer’s property.
- Within 24 hours of the valuation, we will send an offer.
- Your customer completes an Offer Acceptance Form.
- We agree on a completion date that suits your customer.
We also offer a specialist Park Homes Part-Exchange service. Visit our FAQs page for more information about our PX schemes, or contact us to speak to one of our property experts.
The Benefits of Part-Exchange for Housebuilders and Sellers
1. Attract More Customers
One of the most important benefits of offering PX is that it will attract more house buyers to your services. It’s an added convenience that not all house builders can offer. Those individuals interested in shopping for a new property at this time will be more interested in your listings if you can also offer them PX.
2. Stand Out as the Top Seller among Your Competitors
The competition gets even more fierce when there are many sellers vying for the business of a limited number of buyers. When you provide PX to potential customers, you’re offering them an experience of higher value, so they will be more likely to choose you as their seller. Providing added value and developing a powerful unique selling point (USP) is one of the most effective ways to enhance the customer experience and attract new customers.
3. Make Your Customers Excited to Buy
People may lose interest in buying a new home when they experience the frustration of trying — unsuccessfully — to sell their current home. PX is the perfect way to help your customers break out of the housing chain, and it helps them maintain their enthusiasm for moving ahead with a purchase.
4. Enjoy Reduced Sale Fees
Selling a home in part exchange can mean that your customer gets slightly less than market value. But did you know that the price difference is insignificant? Make sure your customers understand the benefits of selling to a builder or developer.
Try showing them an online calculator to compare a discounted offer with the proceeds of selling a house on the open market via an estate agent. The discount is quite small once you realise that selling with an estate agent can incur additional fees, plus VAT. Estate agent fees alone can run into thousands of pounds, but with a PX purchase, there are no additional fees.
5. Close More Sales and Stay Out of Debt
PX will increase the rate of sales on-site, and where the development is leveraged, it will allow you to repay the debts earlier. This enables capped debt facilities to be revolved to the next site. With PX, you can keep your development plans on track and maintain a healthy bottom line.
6. Avoid Budget Capping
By outsourcing PX, you can offer it as often as you need to without being limited by your budget. A PX scheme could make the difference between a buyer choosing to move forward with a purchase from your development or that of a competitor who does not offer the same incentive.
7. Help Buyers Downsize without Paying the Value Differential
It’s easy to provide PX to your customers who want to downsize when you outsource the task. A third-party company will buy just about any property from your client, even if the new property is of lesser value. One in three home movers are “last-time buyers” looking to downsize as they get older, making this a huge market for housebuilders.
Furthermore, a growing number of homeowners plan to downsize to help their children get on the property ladder. So, by targeting downsizers, housebuilders could also attract first time buyers.
8. Get Your House Builder off the Site Early and Save Money
For housebuilders, PX can facilitate an early exit which can reduce the overhead costs associated with on-site presence. Lower costs mean a healthier profit margin and more funds for the next project.
Experience the full benefits of outsourcing PX and watch your housebuilding business grow, despite the limitations of operating during the pandemic.
Weighing Up Part Exchange Homes Pros and Cons
Of course, where there are pros, there are also cons. What are the potential downsides of house part-exchange schemes for your customers?
- Not all properties are eligible for part-exchange
- PX can only be used to buy new-build homes
- New-build homes are often smaller than older properties
- Construction of the new home could be delayed
- Your customer will receive less than market value for their property.
PX will not be the right choice for all of your customers, but by offering it, you provide an option that not all your competitors do. This could make the difference between making and losing a sale. If a potential customer has a property to sell, loves modern homes and can afford to accept a slightly below-market-value sale price in exchange for convenience and cost savings on fees, a house part-exchange could be the perfect solution.
For more tips on incorporating part-exchange into your house offers, contact HBB Solutions. Take the first step towards better business by requesting a free consultation with one of our property experts.