It’s not as good as doing it properly
We’ve not had significant numbers of new builds in and near Cambridge for decades, so part exchange has been a rare option, then when the thousands of new Trumpington properties first came they were all selling so well that builders had no need to offer such incentives.
But times are changing, interest rates have risen and buy-to-let has been made less appealing for small landlords with tax changes. Most critically the number of new builds has rocketed and so buyers have more choice and builders are increasingly turning to part exchange to boost sales.
Just like with a car, PXing your house is appealingly simple. It takes away the uncertainties of having a chain and means you just sign a piece of paper and turn up for the keys when the new house is finished. This, of course, doesn’t come for free. It costs builders thousands in stamp duty and estate agent fees and just as importantly they are taking a risk in doing PX as your house may not sell quickly or for what they think it will. Ideally they’d build in a margin of tens of thousands to cover all that but, just like cars, they know that most owners won’t take that low an offer. This means they build all the costs into the profit margin on the new build. What you’ll never know when you PX is what sort of discount you might have got if you didn’t. If you walk through their door ready to go you’re loads more appealing than someone with a PX so that tens-of-thousands risk the builders take with them could easily come as a discount on the price for you. Maybe even more. But do you care? So long as you’re happy with what you get for your house and what you’re paying for the new one, part exchange can make life much easier and that’s worth something.
PX is quite an extreme move for builders and they usually only offer it as a last resort. What they often offer instead is something they appealingly call an ‘Assisted Move’. With this the builder doesn’t buy your house but they agree to reserve the new build for you if they can take charge of your sale. This has two benefits to you – they pay the estate agency fees and because the new build is reserved to you there is no risk of losing it. It has big benefits for the builder over PX – they don’t have to pay the stamp duty and other costs of buying your house and they don’t have the risk of losing money on the resale price. It seems like a good compromise. But our experience is that it’s the absolute worst of both worlds.
National house builders don’t understand local second-hand markets. They don’t have the time to look in detail at each PX property so they appoint a national intermediary to do it for them. But these intermediaries aren’t able to understand the intricacies of local markets any better than builders. They often charge estate agents a fee, meaning they just appoint those prepared to pay for business rather than making a judgment on who would be best placed to sell a property. Worse still, they often instruct three agents at once, which is the kiss of death in Cambridge. Nothing looks worse than a property that’s so difficult to sell that it needs 3 agents. The theory is that these intermediaries take away some of the work from a seller, but in reality what they take away is all of the control.
When we work with our clients it’s a collaborative effort. We agree the best photos, agree the marketing campaign, agree when and how to do the viewings. We take great care to optimise everything. We analyse buyers to decide if they’re any good, analyse their offer to see if we think we can do better by waiting. We don’t rush to take the first offer just to get the file off our desk. We discuss everything with the owner to do the best possible job.
Intermediaries generally don’t discuss, they dictate. The price, the launch date, which agents they use. It’s their way or the highway. We’ve even had them cancel promising viewings to accept an offer lower than the asking price. No amount of frustrated discussion would convince them to wait one more day. They didn’t care about getting another £10,000 they just wanted it done.
My advice therefore is that when a builder is trying to convince you to sign on the dotted line you either go for a full part exchange, knowing you probably aren’t getting a great deal but accepting that it’s worth it for the ease. Or that you go away, sell your house properly and then make them an offer. I am certain that assisted moves usually end up costing the house seller more money than they save in estate agency fees. By a long way.