Breaking the chain of risk to get a brand new home
Part exchange is more popular than ever with people who want to get moving. Sharon Dale reports.
THE chances of a property deal collapsing are high in a market where buyers are nervous and mortgage lenders are apt to change their minds.
Chains regularly break down leaving misery and stress in their wake, as John and Karen Bellis know only too well.
The couple and their two children were packed and ready to move into a brand-new detached house when they received a call from their solicitor.
“We thought he was going to ask us to come and sign contracts but he told us that the person at the bottom of the chain had pulled out, meaning our buyer wasn’t in a position to proceed. We were absolutely devastated,” says John.
“My daughter had already planned her new bedroom and we’d packed most of our belongings.”
John and Karen had previously asked Miller Homes about part exchanging their ex-coal Board semi, which was valued at £115,000 by an estate agent, for a new four-bedroom detached. The developer offered them £97,500.
“At the time we thought we’d try our luck on the open market and we accepted £106,000 from our buyer.
“But when we went back to ask Miller Homes if they could help us when our sale fell through they were fantastic and offered us £100,000,” says John.
“We had already paid Miller £5,000 for a whole host of extras for the new house and if we had pulled out of the deal we would’ve lost that money so all in all we thought the part exchange was a great solution.”
The Bellis family were in their new £194,000 property within six weeks.
“I can’t tell you what a relief it was and how much stress it took off our shoulders. Yes we took a lower price for the old house but it was worth it and because the new house is so well insulated our bills are half what they were,” says John.
The message is that you may have to take a below market value price for your house if you part exchange for a new-build as the developer will need to sell your old property on quickly. But the swap should prevent heartache and hassle and it will get you moving.
The Miller Homes exchange scheme allows buyers to swap their home for a new one whether they are looking to upsize, downsize or buy like for like. It marks a departure from traditional part-ex conditions, which usually require the buyer to purchase a property worth at least 30 per cent more than their existing home.
“Steve Mcelroy, sales director for Miller Homes Yorkshire, says: “Interest in part exchange is strong and has been from the beginning of the year. We have seen a lot of interest from people whose homes are not yet on the market, which is mainly due to the perceived difficulties with selling their existing property in current market conditions.”
Most volume builders have swap schemes and an increasing number of smaller developers are using them, though they may not shout about it.
“Smaller developers will often consider part exchange because it’s a way of creating cash flow, though they have to be able to buy at the right price. So even though it may not be mentioned in the brochure it is well worth putting the suggestion to them,” says Tony Wright, head of residential at Carter Jonas, Harrogate, who adds that the practice is also becoming more common in the second-hand homes market.
“We’ve come across situations where it has been a good problem solver in cases where there is a reasonable price differential,” he says.
But although swaps take place, Tony doesn’t believe it is a good idea to publicise the possibility when advertising a property.
“It’s an accepted incentive with new homes but in the second-hand market saying ‘part exchange considered’ can hint at desperation.
“It’s something that is best explored with prospective buyers and engineered by the owner and their estate agent.”
PROBLEM SOLVED: John and Karen Bellis with a Miller Homes adviser. The couple part-exchanged their home for a new one after a sale fell through.