Pearl Lemon Properties

Part Exchange Property

The Ultimate Guide on Part Exchange Property

What is a Part Exchange Property?

A part exchange property is a property in which the owner wants to move elsewhere, but has a current property they need to sell quickly, the property that would be a trade-off is then the part exchange property. Due to how fast that they want to sell to move, the homeowners may enter into an exchange. Typically what is done is the current home is sold to a person or company in exchange for being able to move into a different property and simply paying the difference in cost.

Part Exchange Property

Photo Credit: We Buy Any Home

Are There Advantages to Being a Part of an Exchange Property?

If you are looking to change your housing situation, or as a property investor looking to switch up your property portfolio, the right moves with a part exchange property can allow for some major advantages.

An initial advantage that if you are a homeowner, this is a good way to make your current home act as a partial check or payment towards your next potential dream home. If you want to upgrade without dropping too much money, finding a deal like this can allow you to accomplish this.

As a property developer, this may allow you to get rid of or take on new properties much quicker than buying and waiting for new properties and then having to fill those lots. As a developer, you would be able to hurry and get someone into a home and then have another property to be able to fill or change as well.

For either party, part exchange property transactions are also fairly quick. Due to this type of scenario being an exchange rather than a standard purchase or sale, the process of getting one property and trading it off for the other goes by much quicker. So if you are on a timeline crunch, this can be a great advantage.

Participating in a Part Exchange Property

Buying a part exchange property from a developer is one of the most common ways to go about a part exchange. A developer often has access to numerous property types and larger portfolios than individuals. Participating in a part exchange property may also involve private homeowners instead of a developer. There are a few most common types of properties that are often dealt with. These may include:

New Homes From Companies

Buying a new home from a company is the most common form of part exchange property transactions. This would be when you as a homeowner approach a company developing new homes and you opt to upgrade to the new development in exchange for your current home. After this exchange, you would then owe the difference 

There are many qualifying factors to do this and most approvals are done at an upgrade of 33%. So if you want to upgrade from your home valued at $100k, a developer would likely approve if their property was valued at or very close to $130k.

Homes From Private Individuals

This is one of the rarest property exchange options. This has no monetary exchange with it, but rather is a type of straight trade when there is one individual that wants to upgrade and another that wants to downsize and they both suit each other in what the other party is looking for.

Downsizing to a Property Developer’s Property

This form of downsizing often benefits those in retirement age or those looking for a smaller, low-maintenance home. Most of the time, in this case, a person will sell their home and move to a property developer’s property. Likely this means you would be living in an apartment after your downsize.

Downsizing Your Home

If you are downsizing, this option usually ends up benefiting you as the moving party. This is because if you have a larger property that holds a decent value, downsizing means you are jumping down in value, so the developer you sell to will end up (hopefully) paying the difference.

House Swapping

House swapping is a form of part exchange where there is often little to no monetary exchange with it. This is because the properties are straight exchanged meaning that the two owners simply trade. It is important to note that this is most typical amongst relatives because no party gains or loses money.

Lydia is Pearl Lemon's Head of Internal Growth. Outside of Pearl Lemon, you can finder her running, lifting, and hiking.

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