GAYNOR HOOKINGS, MARKETING DIRECTOR, NEW HOMES PART EXCHANGE

November 2008

New Homes Part Exchange, sister company of the New Homes Mortgage Helpline, is dedicated to providing a complete sales service to the housebuilding industry, specialising in part exchange

How housebuilder incentives are good news for agents

There is no denying that in recent months a surge of homebuyer incentives have flooded the market, as housebuilders strive to entice back buyers who are refraining from making a purchase in the current climate.

From stamp duty or legal fees paid through to furnishing packages and cash back deals, housebuilders are pulling out all the stops to keep the market moving.

However, amidst a plethora of enticing offers and housebuilder deals, there is one incentive which appears to have risen above the rest, proving a key enabler for new homebuyers and a leading selling tool for today’s housebuilders: part exchange. The process is simple; the housebuilder offers to take the buyer’s existing home in a part exchange deal for their new one – eliminating the need for customers to face the hassles and associated costs of selling their home, while securing a sale for the housebuilder.

Part exchange – the pros and cons

Part exchange brings with it many benefits for both the housebuilder and the homebuyer. For the housebuilder it enables them to secure a sale while removing any delays, which may be caused by long chains or a property, which isn’t selling. For the customer, they get a guaranteed buyer and are spared the costs of estate agency fees and all the hassles associated with putting their own home up for sale. In most cases, the housebuilder even takes on the responsibility of commissioning and paying for the Home Information Pack (HIP).

However, there are of course a few drawbacks that both sides need to consider before going ahead. For the housebuilder, they are left with a re-sale property, which they have to put on the market and sell – fast. They also take on the risk that the home may sell for less than they have paid the consumer or that it will not sell at all, although if they are working with good, local agents, this shouldn’t be a concern.

For the consumer, it’s worth bearing in mind that part exchange properties are usually priced to sell quickly, so they may be offered a price lower than the one they were expecting. However, before deciding to reject the valuation off hand, it’s worth consumers remembering that with prices falling month on month and many sellers reported to be facing months with their home still on the market, the price offered by the housebuilder may well end up being be more than they would realistically achieve if they opt to go it alone. Further, opting for part exchange will ensure they can move forward with their new purchase.

The part exchange process

The part exchange process is straightforward – a housebuilder offers part exchange as an incentive across all or a number of its developments. If a customer opts to take this up, the housebuilder will assess their property and, assuming they are happy they will typically contact a number of local estate agents for valuations – either direct, or increasingly through a specialist part exchange intermediary like ourselves. Either way, three valuations are usually obtained and a realistic price is put forward to the customer.

Assuming the customer is happy to accept, the housebuilder will then purchase the re-sale property, leaving the customer free to proceed with the purchase of their new home.

The role of the estate agent

Part exchange is probably one of the only housebuilder incentives where estate agents can directly benefit from new instructions. However, the good news for estate agents is, it’s probably the most frequently used of all the incentives in the current market.

Once a housebuilder has agreed a part exchange deal with a customer, they are usually keen to sell the re-sale property promptly. One of the primary concerns for the housebuilder at this stage is that they select an agent (s) who has a good understanding of the local market and who gets the price right from the offset. It’s not about valuing a property at a price that may sell, it’s about valuing a property at a price that will sell, and quickly - if an agent gets it right at this stage they are likely to benefit from repeat instructions.

The benefits for agents

One of the huge benefits for agents taking on part exchange homes is that the homes will be keenly priced from the offset. If we are acting as the housebuilder’s intermediary, we will always ask the agents for a realistic valuation, which will see the property sell in four weeks. That‘s always our aim, and we usually achieve it too.

While the market is admittedly slow, we are still finding that four weeks is a realistic target, if the home is priced correctly. There are still people out there looking to buy at the right price, and if agents are selling a part exchange property they know that it will be priced for a quick sale from the offset.

Over the last year the number of part exchange homes coming on to the market has multiplied and a number of agents are benefiting directly from this. Those agents who can prove they have a good understanding of the local market and who know what sells and for what price, can significantly boost their business through part exchange – in fact for many agents, part exchange is proving a lifeline in today’s market.

-Ends-

Notes to Editors

New Homes Part Exchange, sister company of the New Homes Mortgage Helpline, is dedicated to providing a complete sales service to the housebuilding industry, specialising in part exchange. Launched in 2000, it has built an enviable reputation within the new homes industry and is now the fastest growing part exchange company in the UK.

New Homes Mortgage Helpline is the leading UK new homes mortgage specialist, providing mortgage expertise to House Builders and their clients.

Visit www.nhmh.co.uk

For further information please contact The Wriglesworth Consultancy:

Sarah Randle s.randle@wriglesworth.com,
020 7427 1428

Claire Hendry c.hendry@wriglesworth.com,
020 7427 1407

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