Old in exchange for new: how does trade-in on the country market?


    It is believed that the service trade-in, allowing for rapid exchange of old property for new construction companies started to implement about ten years ago, when the global economic crisis dropped demand for primary housing. To date in the country market it is provided by some developers and working with them in partnership by the agents. What are the pros and cons fraught with this program?


    Service called trade-in (in English means “exchange transaction”) is widely distributed in the automotive market. It allows you to quickly exchange the used vehicle for a new one, in some cases with the introduction of surcharges. The real estate market, the program may implement the developer, or working with him in partnership a real estate Agency. It allows the customer to quickly exchange the old property for a ready house or under construction or not yet constructed object.

    According to estimates of the managing partner of the company “MIEL-Country real estate” by Vladimir yakhontova, in the market of country real estate the Moscow region and New Moscow, in acquisition of suburban sites under the scheme trade-in is made up to 30%. As noted by General Director of Agency “the White Winds” Alexander Libov, in the regions, this program has more common: “for Example, in Kazan, Izhevsk and Naberezhnye Chelny a large percentage of people build their own houses using trade-in”. As for the New Moscow, where an “White Winds”, then in the company know, at least about 10 large and small builders, are prepared to consider a client’s apartment in payment of a rustic estate.

    Types of services and changes in the value of

    However, should further understand the concept. Experts identify two types of trade-in services on the suburban real estate market. In the first case, the construction company buys the client’s old object and takes its value in the classification of a new home. This option is the least convenient for both parties. The developer is not profitable to take on its balance sheet assets, the implementation of which requires additional costs. And if he still goes on this step, then in almost all cases, reduces the amount of ransom with the purpose of deriving benefits and risk reduction. In the second case, the developer first sells their own client’s apartment, and only then draws up a deal with him on a new object. When working on such a scheme object, typically sold at market price and its cost not reduced.

    “If the company providing the service trade-in, provides the format of the netting, she actually buys the client’s it assets, — says Director for marketing of the company “KASKAD Estate” Olga Magiline. And in this case, as a rule, is really talking about 20% discount from the appraised value of the transmitted to trade-in property. But I wouldn’t call it “understatement” of cost. This is a completely fair scheme, because the result of offsetting the company, in fact, lends to customer, immediately buying it on the asset in order to avoid losses, it is necessary to promptly implement. Everyone understands that this can be done or a discount, or using additional labor costs and advertising costs. And another thing, if the trade-in services the company gives to its client installments when buying a new property, selling with his name transferred to trade-in an object on the open market. There is no repurchase facility, the parties risk nothing, and about any discount in the sale of the real estate in question.”

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    As noted by Alexander Libow, a major developer discount, usually lower than a small company. After all, he has a lot of built facilities, and this program is one of the ways to implement them. Also the developer has the resources needed to complete the whole chain of transactions on purchase-sale of apartments on the market.

    What change?

    According to managing Director of “Metrium Premium” and member of the affiliate network of CBRE Ilya Melgunova, most developers of cottage settlements are considered for trade-in exclusive apartments. Expert calls this approach logical. As practice shows, buying a country cottage is the purchase of a first home. That is, the client already has the property, predominantly urban.

    “Often the trade-in rent city apartments, to buy a new townhouse, duplex or cottage, — says Olga Magiline. — Much less common today, there are buyers who wish to sell the house. And there are almost no those who would sell a really old house. As a rule, people who bought relatively recently and not for any reason, disappointed in himself or in the village in whose territory the house is located. Now they want to sell their asset and buy another property — the closer to Moscow or better”.

    And yet, in the market there are various types of settlements. Some companies are changing urban apartments and suburban real estate objects for apartments in low-rise suburban complexes. “In addition, for example, more remote from the capital regions builders offer to exchange one area for another or land,” — said Ilya Mogunov.

    Suspension and unscrupulous developers

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    Among the main disadvantages of this service Ilya Mogunov notes the complexity of barter schemes in the secondary market. In the exchange of one object to another, at some point, while there is a procedure of re-registration of ownership from the seller or buyer are both objects. If for any reason registration is refused, then problems can occur for “reversal” transactions. So if the new owner refuses to return the object, you will have to sue. In addition, for the client there is a risk that booked them a new home unscrupulous developers sell to another customer with “live” money on hand, at the time, while he will sell the apartment of the client, taken on the implementation in the framework of the trade-in, says Alexander Libow. However, if the right to execute the contract, such problems should arise.

    The principle of one window and the reservation object

    The main advantage of using trade-in for a customer is a one — stop shop principle, when, turning to the developer, he has no need to locate a buyer for their old apartment. In addition, usually chosen cottage is booked up to several months for a specific buyer. “So you can be sure that your dream house will not be sold to another customer,” — said Ilya Mogunov. “It is understood that trade-in is a way to quickly solve their housing problem: quickly sell your apartment on the secondary market, buy profitable option for the country market and often even to stay in the black (if we are talking about selling property in Moscow and move, for example, in New Moscow with the improvement of living conditions)”,– said Vladimir Yakhontov. “Trade-in is convenient because it allows a person to avoid mistakes and free up a lot of time, providing the implementation of their housing professionals,” concludes Olga Magiline.

    Everyone decides for himself

    Thus, the service trade-in on the suburban real estate market has a mixed reputation among customers and among agents. In any case, the customer should carefully choose the company and carefully read the terms of the contract. In the case where the developer immediately buys the apartment client and takes its value in the classification of the object, the object will be underestimated in any case, the discounting can be significant and reach several dozen percent. Only each person can to determine for themselves whether he is ready to make such a sacrifice for the speed and lack of labor in search of a buyer’s existing property.


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