Exchange of an apartment for a new building - offset, supply market in 2021

You want to move to a new building, and at the same time you have an old apartment. Traditionally, selling an old one and buying a new one requires a lot of time and effort: finding a seller, negotiating with the developer. Due to red tape with the sale, you can miss out on your dream apartment, and the process will drag on for a year, or even more. Or it can be simpler: under the trade-in program, you can use your old apartment to partially or fully pay for a new apartment in the “one-stop” mode.

We tell you what the essence of the scheme is, what its features, advantages, limitations and risks are.

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How does a trade-in work in real estate?

In the market, this scheme is often called “apartment for offset”, “offset”, but in essence it is not such, it is impossible to draw direct analogies between trade-in and offset.

Selling apartments in a new building under this scheme is not a simple exchange of an old apartment for a new one. It will not be possible to rent out your home to the developer and move into a new building - he cannot simply accept the old meters as payment for the new ones, and, more often than not, he does not buy the apartment for himself.

The developer, under the guise of an offset, offers you to sell your old apartment through an affiliated partner agency and use the proceeds from the sale to buy a new one. Everything is done through “one window,” that is, through a construction company.

Technically, a trade-in scheme is two transactions that take place in parallel: a sale and a purchase. Two agreements are concluded:

1. an agreement for the sale of an old apartment, which specifies the cost of sale and the amount of commission for services rendered;
2. a contract for booking an apartment in a new building, where you are assigned a specific apartment and its cost is fixed.

You can do all this yourself: find the owner of an old apartment, conduct a transaction and bring money to the developer. But this is often inconvenient: you need to spend time and effort searching for a buyer, searching for and booking an apartment in a new building and checking all the documents.

To sell housing under the trade-in scheme, the developer in most cases cooperates with affiliated agencies. They will evaluate the property and sell it within a pre-agreed timeframe.

There are also rare cases of the classic scheme, when an old apartment is bought directly by a developer or real estate agency and then sold through its own channels. But these are rather exceptions - traditionally, developers specialize in primary housing; there are real estate agencies for operations on the secondary market.

Exchange old housing for new one. How the “Apartment Credit” program works

But let's figure out how this exchange occurs and which residential complexes are ready to offer such a solution.

Firstly, an apartment as an offset is not really an exchange. The developer buys your old apartment at the market price, and the amount from the purchase is transferred to pay for the new property. And the price of your old apartment, of course, may not reach the cost of a new one.

Secondly, such a solution greatly simplifies the life of the owner. There is no need to sell the apartment on your own, as this can take many months.

Thirdly, this method has a small disadvantage - it is not possible to purchase an apartment in all residential complexes, and your old apartment should only be in Minsk or the nearest suburb.

What legal bodies and norms regulate the process of renting out an apartment?

An official document regulating the process of transferring old housing to offset the purchase of a new one was released on March 30, 2015 by the Ministry of Architecture and Construction. According to the document, the owner has the right to apply to the developer to accept the housing as offset. The developer evaluates the old property, but at the same time has the right to refuse to accept the owner’s property as credit for the new apartment, without explaining his refusal in any way.

The transfer of the premises is carried out on the basis of an agreement, the obligatory terms of which are the subject of the agreement, the terms and conditions of the transfer of the apartment, the cost of the old housing, the rights and obligations of the parties, the procedure for changing, supplementing and terminating the agreement.

Which developers offer this service?

Only large developers can afford to work under the “Apartment credit” system. Let's look at which residential complexes this program is available in.

Megapolis Photo: Photos from open sources

Residential complex "Megapolis" near the Malinovka metro station. Apartments with an open plan area ranging from 44 to 109 sq.m. are available for sale. Convenient location, developed infrastructure - a great addition to a good apartment on excellent terms.

Residential Complex "Olympic Park" Photo: Photos from open sources

The Olympic Park Residential Complex is a premium-class quarter, located between the Lebyazhy reserve and the Drozdy reservoir. In the new “green” quarter for Minsk, you can choose an apartment to suit every taste: from small apartments (38 square meters in area) to spacious penthouses (194-229 square meters in area).

Residential complex "Braslavsky" Photo: Photos from open sources

The residential complex "Braslavsky" is also located in one of the most environmentally friendly and prestigious parts of the city - in the Lebyazhiy microdistrict. This complex is already presented in a more affordable price category. Apartments ranging from 56 to 121 square meters.

Residential quarter "Pier" Photo: Photos from open sources

Residential quarter "Pier", located outside the city in the Molodechensk direction. Today there is an offer for the purchase of apartments and townhouses ranging from 40 to 246 sq.m. The quarter offers European architecture of buildings; in addition to a standard apartment, new residents will have the opportunity to live in townhouses with a ceiling height of 3.5 meters and separate cottages.

Each of these options can be purchased using.

For each of the apartments, after a quick check and assessment, there are several transaction options:

● Equivalent exchange. This option is available only to those buyers whose apartment will fully cover the cost of a new one.

● Transferring your property to the agency as a down payment. The remaining amount can be repaid immediately or even taken in installments.

● Sale of an apartment without its purchase by the developer. This option is for those who are in no hurry to sell. The apartment will be sold through a real estate agency.

Although this option for purchasing an apartment is new, there are undoubtedly advantages. We looked at excellent options for modern housing from Minsk developers in excellent areas with good infrastructure. And there is an opportunity to move from the old “Khrushchev” to a modern house. At the same time, you pay nothing extra, and in some cases, nothing more. This is a unique opportunity that will allow many people to improve their living conditions on excellent terms.

Material prepared by the portal Salere.by

How does the trade-in process work?

The conditions and nuances of trade-in transactions may differ among different developers, but the steps are approximately the same.

First step.

You choose a developer and find out if he has a trade-in program. If there is, then select a suitable apartment in the developer’s residential complex and fix its cost.

Second step.

The real estate agency from the developer inspects and evaluates your existing apartment within three to five days and issues an opinion. You negotiate the terms of the sale of the apartment, the lawyer checks the documents.

If you are purchasing a new apartment with an additional mortgage payment, the agency will help you choose a bank and get mortgage approval.

Third step.

If you are satisfied with the results of the assessment, then sign an agreement with the agency for the sale of your apartment, which specifies its cost, the timing of the sale (usually from two to six months) and the amount of remuneration for services provided, if any.

Fourth step.

In parallel with the sales contract, you enter into a booking agreement for a new apartment with the developer. A specific apartment is assigned to you and its price is fixed for a period of time (usually for a period of two to six months). During this time, the apartment cannot be sold to anyone else.

The reservation agreement can be paid: in the form of a certain amount (on average from 50 thousand rubles) or a percentage of the cost of the property (from 0.5 to 2-3%).

Fifth step.

The developer's partner agency is looking for a buyer for your old apartment. This usually takes from one to six months.

Sixth step.

After a buyer has been found for your apartment, you sign a purchase and sale agreement with him and formalize the deal with the developer. As a rule, both transactions are concluded on the same day. The money received from the buyer of your apartment is sent to the developer to pay for the new one.

If necessary, you can pay the difference in the cost of the old and new apartment from personal savings, using a mortgage loan or maternity capital.

How is the exchange procedure carried out?

Application

Leave a request on our website in a special form or by phone.

Sales organization

Let's find a buyer for your apartment!

Views

Organizing viewings for the buyer.

Preliminary agreement

We will officially document the agreements reached between you and the buyer.

Selection of new real estate

We will select a new building for trade-in exchange in Moscow or in the region of your choice!

Assessments and verification

We will assess all the risks for the selected property.

Deal

We will act as a guarantor of compliance with the terms of the transaction.

Payment

We organize secure mutual settlements.

You can choose housing in a new building in advance, and we will agree on its reservation with the developer for the period of sale of your property.

High quality services at affordable prices

What to pay attention to

1. An old apartment will most likely be sold at a discount. Usually two selling prices for an apartment are set: the desired one and for a quick sale, that is, below the market price. The discount most often does not exceed 15%, but can grow if the property being sold is not in demand.
2. The apartment may not be sold within the agreed period. Then different options are possible: extend the reservation period for a new building, reduce the sale price, return the cost of the reservation or the down payment. Everything is negotiated with the developer and the agency.

The transaction may require additional costs. You will need to pay a commission to the agency for the sale of the old apartment and support of the transaction. But some developers can fully or partially cover these costs, for example, paying a commission to the agency. You can only buy an apartment in a new building under the trade-in program.

Calculation: which is cheaper – resale or new building with a mortgage in 2020

After repaying the debt, an apartment in a new building will cost 6,571,102 rubles. Resale – 6,109,856 rubles. In total, it is more profitable to buy an apartment on the secondary market for 461,246 rubles. This is if we take into account only the costs of purchasing housing. That is, it is cheaper to buy a resale apartment with a mortgage.

As time passes, the predicted housing price will change. Simply put, they can be sold for other amounts of money. Taking into account the accepted input data, the cost of the new building will be 4,254,799 rubles. Resales – 3,887,430 rubles. It is more profitable to purchase a new building for 367,369 rubles.

Taking into account the projected changes in prices on the housing market, as well as the difference in costs when buying an apartment with a mortgage in 2020, it is still more financially profitable to buy a resale property. In total, it is cheaper by 93,877 rubles.

At the same time, this amount is insignificant. It is 2.4% of the price of a new building, and 2.6% of a secondary one. That is, comparable to the mandatory additional costs for some services during the loan application process.

Accordingly, if you want to take out a mortgage on a secondary or new building, you should rely not on the financial difference of these debt obligations, but on other parameters. In particular, personal priorities concerning essentially these two different housing markets.

Official sources of information:

• Website of the Central Bank of the Russian Federation - link;
• Rosstat - link.

about the author

Dmitry Sysoev - higher education in economics from Sumy National Agrarian University with a degree in Organization Management. Analyst of the banking sector and microfinance market. Experience working in specialized commercial structures - both banks and microfinance organizations. For more than 5 years, he has been creating useful content for consumers of financial services and organizations - information and analytical articles on the banking sector and the microfinance market. [email protected]

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Requirements for an apartment for sale

The trade-in scheme works if the old apartment is easy to sell. Requirements for an apartment can be obtained from a specific developer, but usually they are standard for all developers:

• The apartment must be the entirety, that is, not a room or a share. Country houses are often not suitable for trade-ins.
• The apartment for sale must be located in the same city where the new home is being purchased.
• Legal “purity” of the apartment: it must be your property; it is undesirable if one of the owners is a minor or there were many owners in the past; the apartment should not be seized.
• The apartment has a convenient location, as this affects the speed of sale and the size of the discount.
• The apartment has been redecorated - this will make it easier for the agency to find a buyer./li>
• The year the house was built is no earlier than 1960; the house is not in disrepair, its wear and tear does not exceed 40%; the floors are not wooden; if there were redevelopments, then they were agreed upon.
• If you have an apartment in a new building, and the developer has a trade-in program, then you can easily make an exchange by choosing a new apartment from the developer’s residential complex.

The developer or partner agency will check and determine whether the apartment is suitable for sale when they evaluate it.

In what cases is a trade-in beneficial?

Trade-in has many advantages, but the program is not always profitable. If you have savings for the down payment, then it is better to take out a mortgage for the remaining amount and sell the apartment in the “normal” mode - then you will not lose money due to the discount that exists when selling by trade-in.

Or, if it is important to sell an apartment at a higher price and deadlines are not pressing, it is better to use the standard scheme: first sell the old apartment, then choose and buy a new one.

In other cases, trade-in has a number of advantages:

• Saving time, urgency and efficiency. The main advantage of the program is the opportunity to quickly sell your apartment (especially one that for some reason was not sold before) and move to a more comfortable one.
• You don’t have to wait to sell your old living space and get a mortgage loan.
• Buying a new apartment without significant savings. If the cost of the old apartment can completely cover the purchase of a new building, you get a new apartment without investment.
• Fixing the cost of an apartment in a new building. Prices for primary housing are growing faster than for secondary housing, and in a few months the selected apartment can become significantly more expensive. A reservation agreement for a trade-in allows you to fix the price of a new apartment while the old one is on sale. There is no need to urgently look for additional funds to conclude and finalize a transaction.
• An apartment in a new building is assigned to you. The apartment selected under the trade-in program will not be available to other buyers. This is especially convenient if you have chosen a rare apartment in a popular residential complex.
• The program is carried out in a “one-stop shop” mode, without the participation of a large number of intermediaries, which saves time, money, effort and reduces risks. You do not have to contact different agencies to sell and buy an apartment.
• The transaction is supported by specialists. You do not need to evaluate the existing apartment yourself, do pre-sale preparation, look for a buyer and negotiate with him, show the apartment, draw up documents and look for an acceptable mortgage program. All this is taken care of by specialists.
• There is no need to pay a lawyer, since the partner agency that supports the transaction checks all the documents.
• But you can hire an independent lawyer to be absolutely sure that the transaction is safe.

The downside of trade-in in real estate

Trade-in transactions also have disadvantages, limitations and risks:

• The main disadvantage of a trade-in is the loss in the value of the apartment being sold due to the discount and payment of all commissions. On average, this is from 5 to 20% of the market price of the apartment, and sometimes this percentage can reach 30.
• You need to live somewhere if the new apartment is still under construction. In addition, repairs may be required, which will push the housewarming party even further back.
• Since the old apartment becomes someone else’s property, you will have to live with relatives or temporarily rent housing, and these are additional expenses.
• This risk can be minimized by choosing an apartment in a new building at the final stage of construction.
• Narrow choice of new housing. Not all developers or all residential complexes of the selected developer participate in the scheme. And this may not even be every apartment in the selected building.
• Not all old apartments are eligible for trade-in due to the requirements imposed on them.
• There is always a risk that a house under construction will become a long-term construction project.
• There is no opportunity to change your mind - the money from the sale of the old apartment immediately goes to the developer’s account as the main contribution for the new one.
• You may encounter unscrupulous schemes when, for example, an agency found a buyer for your apartment and you signed a purchase and sale agreement, but the developer suddenly refused to sell the new one. To prevent this from happening, carefully choose your developer or partner agency. Our materials on choosing an apartment in a new building and choosing a reliable real estate agency can help you.

The essence of the trade-in scheme

The trade-in scheme began to be used in the Russian real estate market at the end of the 2000s, when the demand for new buildings decreased significantly due to the crisis, and developers needed to attract the attention of potential clients. Some construction companies still offer this scheme today.

In most cases, buying an apartment in a new building under the “apartment against credit” scheme goes like this. The buyer chooses the apartment he likes and reserves it. To sell an old apartment on the secondary market, the developer usually attracts a partner real estate agency. An agency representative evaluates an old apartment. Then a share participation agreement is concluded, which specifies the fixed price of an apartment in a new building, the buyer contributes 15-20% of its cost. The old apartment is put up for sale, and the agency is handling its sale. The developer usually takes from 3 to 6 months to sell an apartment. After selling the apartment, the client pays the remaining amount to the developer. If the proceeds from the purchase are not enough, you can use a mortgage loan. After putting the property into operation and receiving the keys, the client can move into the new apartment.

Not all construction companies are now ready to sell apartments under the trade-in scheme, since developers are more interested in receiving the entire cost of the apartment at once, that is, in 100% payment or in a mortgage. However, information that the developer is taking the apartment “offset” is available on the websites of Stroitelny Trest, Otdelstroy, Lenstroytrest, RosStroyInvest, Severny Gorod and others.

Reminder if you want to buy an apartment with a trade-in

• The trade-in scheme is not one process of exchanging old for new, as happens in the automobile market, but two parallel ones.
• You enter into two contracts: with the developer’s partner agency for the sale of your old apartment and with the developer for the reservation of a new apartment, fixing its cost.
• The agency evaluates your apartment and sells it. The money from the sale goes towards paying for the new apartment to the developer.
• All trade-in transactions are carried out in parallel, through “one window”.
• You can only buy an apartment in a new building using a trade-in, and your old home must be located in the same region where you are purchasing a new one.
• Rooms or shares are not suitable for trade-in sales; you must be the owner of a separate apartment, and it must not be seized.
• Your apartment should be renovated and conveniently located, and the house should not be too old, built after 1960.
• The main advantage of the program is that you can sell your apartment as quickly as possible, without wasting time and effort searching and negotiating with buyers. The entire transaction is accompanied by specialists.
• The scheme is convenient if you do not have significant savings for a new apartment, or you do not want to take out a mortgage: the cost of the sold housing can completely or almost completely cover the cost of the new building.
• The price of a new apartment during a trade-in is fixed for a long time and cannot be purchased by other buyers.
• One of the disadvantages of the program is that for a quick sale, old housing will be sold on average 15% cheaper than the market price.
• The choice of new housing under the program is quite narrow; not all developers offer trade-in.
• Additional costs are possible: for booking a new apartment; on a commission to the agency for the sale of an old apartment; for rent until you can move into the purchased apartment.

Is it possible to buy an apartment to offset existing secondary housing?

Some developers, banks or even just real estate agencies offer a special system for purchasing a new apartment while simultaneously selling the old one. This is quite convenient, although somewhat risky if you do not use the services of an experienced lawyer. There are two main options by which this can be implemented.

Buying an apartment with the simultaneous sale of old housing

A more popular and profitable scheme is the option when an agreement/agreement is concluded between the owner and the developer/bank/AN (real estate agency) for the following:

1. The client chooses an apartment (for example, in a new building) and it is reserved for him for the duration of this agreement.
2. The old apartment is being sold. Sometimes this is done by the developer’s sales department, but more often than not, even if the work is not carried out directly with the real estate agency, appropriate agreements have been concluded with it. As a result, NA handles the sales.

As soon as the old apartment is sold, the proceeds are not given to the owner, but go directly to the purchase of a new home. Then, depending on the situation and prices, the balance of the amount, if any, is transferred to the owner, and if the new apartment costs more, then he pays the difference from his own funds.

Such an agreement usually has a certain duration. For example, 3 months. If during this time it was not possible to sell the old home, the contract is terminated or extended by decision of the parties.

Example: Suppose a person has a two-room apartment. He wants to sell it and buy himself a one-room apartment in order to pay less for utilities. It is logical that a two-room apartment is almost always more expensive than a one-room apartment. A person enters into an agreement with a developer according to the scheme described above. The old apartment is sold, the proceeds are divided between the developer (for the purchase of a one-room apartment), and the remainder of the amount is transferred to the client.

Buying an apartment with the purchase of old housing

The second option is usually implemented much faster than the first, but it also has its drawbacks. In this case, the developer directly buys the old apartment and, in return, transfers ownership of the new one.

As practice proves, developers always lower the price of old housing by about 20-30% in order to sell it as quickly as possible. Thus, a person loses the same 20-30%.

Example: Let's assume that a person has a two-room apartment worth 3 million rubles. He wants to buy himself a one-room apartment for 2 million in a new building. The developer buys old housing for 30% cheaper - the amount is 2 million 100 thousand rubles. As a result, the owner of the new home receives, in addition to the new apartment, another 100 thousand. And if he had been involved in the sale himself or acted according to the sales scheme presented above, he would have saved for himself not 100 thousand rubles, but a whole million.