Buying new build

zeeww_2

MSE Official Insert:

Check our guides for help and tips:

Moving House Checklist
50 House Buying Tips
Buying a Home Timeline

Back to the original post...

---

Hi,

I know the debate about buying new builds, and paying the premium over similar 'older' properties in the area. I wonder if someone could shed some light on new build negotiations and how to make offers to developers.

I'm interested in a Redrow property in Rugby, on their New Heritage range, it's the Cambridge model I like, listed at £280,000. Similar sized properties (might be a tad smaller) in the area went for 250k-260k with some requiring updating, and only 1 parking on the drive (Cambridge's got two)

It's a a fairly new development, nothing completed yet, so if I am interested in buying, is there not much room for negotiation, as the builder could hold on till these are built? I'd have thought they would want some sales to get the site going, and inject some cash flow to get the rest of the development going.

If I were to negotiate with the developer (before I put down a reservation fee), do I just make an offer to them and see if they accept (they might reject it on the spot?)?

I'm currently renting and have a mortgage AIP in place, with a 25% deposit.

The other question is, as I'm not local to Rugby (moving into the area to be closer to families) i realised that this Redrow's development is about 2-3 miles away from a cement factory, will this have an impact on the property, area, pollution etc? On the other hand, the area's primary schools and grammar schools are top-notch apparently...

Thoughts and comments welcome. Thanks

LeafGreen

Negotiation is an artform and you need to be prepared as the developers sales reps will most likely be well trained and experienced.

Make an appt, pref at a quiet time if you can (ie not weekends) and play it cool. Be honest and mention that you are also looking at developer Y's properties etc. Even if you are dead set on the Redrow ones, do go and look at some others - it's useful to get a feel for what to look for, questions to ask, and get some negotiation practice in. Yes, they will probably phone you afterwards but it's easy enough to say you have decided to buy elsewhere.

That price is from £280k by the way - there could be several "Cambridge" plots that are more expensive - perhaps they have more parking or a larger/south facing garden. The rep will be able to show you what is there. At this point you can ask which ones of these are still available - or to look at it another way, which ones have been reserved.

The starting point in negotiations is the inclusion of carpets/flooring, fittings etc, depending on how far the build has got. Anyone who pays list price without getting some "freebies" is a mug.

The tricky bit is going from there, to asking for a discount on top. They will tell you their properties are already competitively priced and all the rest of it. It is harder if they are still going up. One option is to say you don't want any of the freebies, but offer a price below list - but of course you also need to consider that you'll be buying your own carpets etc. And they will want as high a price as poss on the land registry records.

All you can really do is decide on what you think is a fair price. Accept that new builds do have a premium and factor that in. Then just come out with your offer. If(when) they knock you back - stress your beneficial position - nowhere to sell, flexible move date, mortgage agreed etc etc. In the current market, I suspect a headache for developers is waiting for homeowners to sell their current place. You could also try getting them to pay stamp duty as part of your negotiations for a lower discount on list.

If other sales are going through, ask whether valuations are coming in at the purchase price. They could lie, but it's worth asking the question.

In terms of how much below list to go - absolute max 10% unless they really are way overpriced. more likely 5% but remember the freebies.

Remember - once you have put down a reservation (to make sure noone else gets the plot), you lose all negotiating power.

zeeww_2

Thanks grahamgoo, that's very useful.

I've not my sights onto any plot yet, but yes some plots are a few grand more than 280K. I'm taking an opportunity to go to another development where they have got Cambridge show home to have a better look, of course I will have to ignore the furniture and fittings in those as they could be very tempting.

In terms of the freebies, as the build is only at foundation level, not sure what freebies could be had but I'd rather have money off list price and buy my own flooring etc, however I will definitely try to ask for both if I go ahead.

Apparently 30% of the site build are allocated to affordable housing, is that the norm or too high? No offence against anyone, but is affordable housing going to cause much issues with selling on, or problems on a new build estate?

caeler

Sorry to be negative but why not do a search on this forum for 'new build' there are hundreds of posts about buying and negotiation and many of the same people (including me!) repeat the same advice from experience. Good luck in buying your house.