Discounted new build and potential problems....

abbieno7_2

Hi there

Please can anyone assist with our concerns.

We recently reserved a new build home (already built and one of the last 2 on the development) so the builders offered to let us purchsae it for 22,500 less than their original asking price. This was not actually advertised so wasn't officially a discount apparently.

My worry is that the builders have left the initial asking price in the window of the house and Halifax' valuers came out today to value the property for lending purposes. I am really worried that the valuer will have noticed the builders sign and this may cause the Halifax to ask questions as to why what we are paying is a lot cheaper? I have since read up on the web that if you are being offered a new build at a "discounted price" you need to declare it on your application otherwise the lender could withdraw their offer.

We are using a broker so havent completed the forms ourselves however she didnt put down on the application that it was reduced as so far as she was concerned (and as the Builders stated) it was an offer price due it being the last two on the development.

Can anyone shed any light on this please or do you think we are doomed and the offer will be withdrawn?

ps the Builder's rep called to say she had forgotten to take the note out of the window showing the previous price but the valuer had completed a CML form whilst he was at the property and hadnt asked her the price (which i wouldnt think he would need to would he? i presume he would already have this info from the Bank??) Sorry i am a FTB so not too up on this whole house buying process.

Any advice would be much appreciated!! Thank you

kingstreet

Price reductions are fine. It's other incentives lenders worry about - like gifted deposits and cashbacks.

Sticker shouldn't matter as the solicitor will complete paperwork for Halifax which correctly states incentives mentioned.

Most properties are advertised for more than they actually sell for. Your situation is only different because it's a new build.

abbieno7_2

Thank you so much for your prompt response - I really appreciate it - so you don't think it will affect the offer even if our broker hasnt mentioned it to the bank on the application?

Sorry, I am just stressing lol

Leon_W

There is nothing to mention if you are paying what you say you are paying on the application form.

abbieno7_2

Thank you so much

abbieno7_2

will the valuer have to tell the bank that the price differed to what he was basing his valuation on then? What is the process for the valuer - the builders rep mentioned something about him having completed a CML form whilst he was there - sorry to appear dim but what does this mean? (I take it CML stands for Council of Mortgage Lenders?)
Thanks in advance

kingstreet

abbieno7 wrote: »

will the valuer have to tell the bank that the price differed to what he was basing his valuation on then? What is the process for the valuer - the builders rep mentioned something about him having completed a CML form whilst he was there - sorry to appear dim but what does this mean? (I take it CML stands for Council of Mortgage Lenders?)
Thanks in advance

The valuer completes the CML form to identify any builders incentives not reflected in a reduction in the price. You do not mention any incentives, so I'm assuming none apply.

For example, if £10,000 out of that £22,500 was being counted as part of your deposit, it would need to go on the form as an incentive.

As it is, like in other sales (see below), the advertised price is X and you are paying Y. All the lender is bothered about is that Y is a reasonable price and the property is suitable security for the mortgage.

Y is what the valuer puts as the agreed price and value and Y is what the solicitor puts on the Land Registry and Charge forms. When you go in to sign, you'll see these.

A second hand property is on the market for X, just like yours and the agreed price is Y, just like yours. It's only the incentives mentioned earlier that muddy the waters in new build cases.

abbieno7_2

Aaah right that makes sense then - there are no incentives as the deposit is a family gifted deposit - i presume this won't affect things as it isnt any incentive from the builder? Thanks for your time - really appreciate it - you have put my mind at rest no end. Wish our broker was as helpful as you are

ovoreo

I got a substantial discount on my new build. I am now finding out I have paid the least (according to land registry) and at no point did the mortgage company want to know what it was originally advertised for. However the 2 properties left over have now been reduced for less than I paid so I suppose the mortgage company would view that as a great deal considering all the others sold were more expensive! Make sure you have a 20% deposit, otherwise your going to struggle although Halifax is often associated with new builds. Also head over to the house buying/selling part of the forum and have a search on there, plenty of helpful FTB posts and new build stuff (but take some of those opinions with a pinch of salt, not everybody likes new builds!) Good luck!

abbieno7_2

Thanks ovoreo

Very helpful info - we have a 20% gifted deposit from parents so hopefully should be ok - the Halifax have indicated that the offer will be posted out as they have done all their checks now, providing the valuation comes back ok ..............so stressful isnt it?! Thanks again