why when doing part exchange on a property do you have to buy a more expensive house than yours?

Answer 1

The answer is you don't.

You should be offered 3 valuations of your existing house by the new house builders, so they can assess a fair value.

If the fair value is more than the one you are buying then you should be given the difference, plus the new house.

However - some building companies insist on only taking a house at up to say 70% of the value of the one they are selling. The reason for this is simply profitability and economics.

The last thing they want is a house worth marginally more than the one they are selling, as in effect to them it means releasing a brand new house which is very sellable, to take on an older one with perhaps a 'used and lived in look' which may sit on the books for a while and perhaps not attain the price they need to make a good profit.

It makes more sense to sell the house they have got at full price and margin and take in a cheaper one with potential to revalue it for sale at a price above what they offer in part exchange.

Best way for you is to sell your own place first, then approach the builder with cash!! You would be surprised how ready they are to deal a discount!!

Answer 2

So you don't get to stockpile the gains. The idea of the exchange is to keep the money moving.