Who is the vendor and who decides selling price in a part-exchange?(14 Posts)
I hope this question makes sense...
We went to see a house today, and the (apparent?!) vendor said something in passing that made me curious... They have reserved a new-build house which is due to be finished in the summer, and the house we viewed has been (or will be?) used as part-exchange for that purchase. So I've just started wondering... Who is actually the vendor - the couple living in the house, or the development company building the house they're buying who are taking this house as part exchange? And who will decide what offer to accept?
I think it's likely to affect negotiations, but I'm not sure exactly how! Does anyone have any experience or knowledge of this type of situation, please?
Erm, sounds very odd to me. Either they sell the house to you and buy the newbuild with the money from the sale + a topup, or they sell the house to the developer + a topup. They can't sell to both of you.
Or are they saying they've arranged you as a purchaser for the developer after they've "sold" to him? So you'd be buying from the developer.
Barratts used to remarket part- ex properties via their agency, Oakleaf. So if similar you'd buy for the agent. However why bother if they can sell to you direct . Who did you view it through , if EA would they advise you and why does it matter ?
Thinking about it they may have already exchanged with the developer (often with new builds you have to do so within a short time frame and have a delayed completion date) so technically it would be the developer selling on to you.
Thanks all. I need to ask the EA, don't I? I wish it wasn't Sunday tomorrow...
LIZS, it matters partly just because I like to know who I'm dealing with, but also because I'm thinking the developers might have different priorities from 'normal' vendors. For instance, the 'normal' vendors wd need to complete before their house is ready, but a developer doesn't... I dunno... Does anyone out there have any experience of this?
In my previous life, pre DC, I had the (mis)fortune to work as solicitor to a developer, so have dealt with many part ex's.
Essentially, once the deal is agreed, the developer will want the sale completed asap, as the property is costing them money every day that they own it in insurance, maintenance etc.
You can complete at any time once the developer owns the part ex house. Quickest that I've ever done was developer completing on the purchase of the part ex at 10 30, and completing on the onward sale by 2pm.
Lizlette, thanks for your answer; that's very helpful.
It all makes me wonder whether perhaps the woman used the term 'part exchange' casually and incorrectly... If the current 'owners' aren't actually still the owners, then what on earth would they do if someone bought their house now, though their new-build isn't going to be ready until at least August?
If the current owners are still in the property, then it's still theirs. In a part ex situation, the developer only gets the part ex house on the day that the owners buy the new build (essentially a property swap with a cash top up). If the new build won't be ready until August, the developer doesn't get the house until August and can't complete on the onward sale until then.
It sounds (although forgive me if I'm wrong) to me that the owners and the developer have already agreed the deal and possibly even exchanged contracts so that the owners buy the new build when it is ready, meaning that the developer will be getting the property as part ex when the new build is built.
If so, it will be part of the deal that the current owners have to let people view the property while they are still living there (so the developer can get shot of it as soon as possible).
The other thing to bear in mind is that (probably-its hard to know for certain without being involved in the transaction) that the new build being ready in August is a best guess, rather than a fixed date. Developers have so many 'wiggle room' clauses built into their contracts so that they can get away with delays, so although they will be aiming for August, if they haven't managed to build the new build by then, they won't have the part ex house to sell to you.
Thanks again Lizlette. I found some threads on Moneysavingexpert.com last night that persuaded me that the situation is just as you describe: I'm pretty sure now that the people in the house have reserved their new build, part-exed their house, and exchanged contracts with the developers, agreeing a long and flexible period before completion. They are still legal owners because they have not completed, but they probably won't complete until their newbuild is finished, and then the developer will purchase from them
for about 5 minutes until they sell on to someone else like me.
As a buyer, if you didn't realise this, you could be in for a long and stressful wait.
On the other hand, it does mean it's more likely a buyer will get a bargain, because the developer will just want to sell - keeping the house will cost them money, and they may even need that money to continue building. I noticed the house was on the market for almost 25% more last summer...
Food for thought...
I do seem to pick weird vendors, don't I?!
Oh and you're absolutely right about August being a 'best guess' - the owner was clear about that. She also said the new build house is currently no taller than she is.
On the other hand, it does mean it's more likely a buyer will get a bargain, because the developer will just want to sell
Possibly, but not always, especially if the developer has a few months before they need to complete on the part-ex and sell on. The part-ex value will probably be somewhat below the true market value but that doesn't mean they will necessarily settle for the first offer that covers the part-ex amount. When we part-exed the house was marketed above the part-ex value and sold within a week for more than the advertised price. You know that you might well have a strong negotiating position but it's not a guarantee, especially with a few months between now and August for them to get a sale.
Flow, you're not kidding! What is it about you and odd situations?!
Phoned the EA this morn, who confirmed the house has been part-exed, and the vendor is the dev company.
Then they called back ten mins later to say the 'owners Mr and Mrs X have changed their mind about moving' and have taken the house off the market. No idea what's going on - presumably that means they've backed out of their contract with the devt co...?
At least I didn't get to the point of actually offering on that one!
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