Negotiating on a New Build House

Mukk2k3

Hi Guys,

Myself and my partner are first time buyers and currently have a 10% deposit to put down on a property. We are currently interested in an end link new 3 bedroom property. The development site is coming towards the end and they currently only have 13 houses left on the site - the one we are interested in is still currently being built and will be one of the last ones to be fully completed.

The asking price for the property was initially £134,950, but it is now on the market for £129,950. The developer is selling the remaining properties through an estate agents and when we spoke to them about a month ago they said that the developers are also offering a 5% gift for first time buyers.

So about 2 weeks ago we initially put in an offer of £124,000 plus asking for the 5% gift on top. This offer was rejected straight away. So we immediately put in another offer of £126,00 plus the 5% gift and stated that this was out limit and we could not afford to go any higher.

The estate agents then got back to us the next day and said that the developers have rejected the offer and they want the full asking price. So they asked us if we would like to up our offer. Again I stated sorry £126,000 is our limit and we cant afford to go any higher. They said please get in touch if ur circumstances change if you can increase your offer and they will get in touch if anything changes with the developers but they said it was very unlikely.

Realistically we can afford to pay £129,000 for the property plus the 5% gift (therefore theorically only paying £122,550). We are just trying to hold out for the best deal we can and have left it for 2 weeks expecting them to call back with a counter off. Although we haven't heard anything.

We dont know whether to up our offer or to just sit tight for a while to see if they call back. We are currently renting at the moment and our circumstances mean that we need to get a property by september in this area so we have a bit of time to play with. Although as we are going through an estate agents I sometimes wonder whether they actually passed our offer on in the first place, as I imagine they will get commission.

Would be grateful for any views on what to do next? We really like the property and would be disappointed if it sold, but on the other hand we don't want to pay over the odds.

Any views would be grateful.

go_cat

It depends how desperate the developers are to sell as to wether they will negotiate .

As far as over paying don't forget you tend to pay a premium for new properties, it may be worth comparing a pre owned comparable house to see what they sell for, also to give you an idea of difference if you wanted to sell it.

AMO

Get the post code to the streets (the street name won't do).

Go to Zoopla and type in the post code for past sold prices.

Get the map of the site and map plot against house number by driving to the site also.

Work out, for similar sized houses what discounts they have given in the past. As those similar houses are likely to be better plots (less noise, corner plots with more land, more drive space outside, additional/closer garage, etc, etc, etc) then you should be able to get a deal to match.

Remember that you don't have a house to sell and therefore should be able in a better bargaining position.

Given the low price of that house and the £5K already knocked off, its on special offer. Most likely they will have already thrown in carpets and curtains. If they have you won't likely be able to knock much off until they are down to their last 2-3 properties that won't sell.

If they haven't thrown in carpets and curtains, at least get that thrown in and you'll have an okay deal (carpets and curtains will be worth about £4K). If they've already decorated it, it will have nice lights also.

Mukk2k3

Hi Guys,

Thanks for your input. I do think the house is a good deal looking at the cost of other new builds in the local area.

I have checked Zoopla and the builders do not seem to be budging on their asking price. The cheapest three bedroom houe they sold was for 127,000, but unsure whether or not they gave the 5% gift deposit on it.

I have just rang the estate agents this morning and explained that my parents have give us some extra money but they were going to give us the moeny to furnish the property. So I have asked them that we need to have fitted wardbrodes in both bedrooms and laminate flooring in lounge and hallway instead of carpet.

So have offered 128,500 (plus the 5% gift) plus these extras. So just wait to see what they come back with.

Are willing to go to 129,500 will these additions put in.

Lovelyjoolz

As someone who works with most of the big house builders, I do know that contrary to popular belief they make very little money on developments now, compared to 10 years ago. Even less now that affordable housing takes up a least 10% of almost all new developments. Who is the developer?

They have so far reduced the price by just under 4%. That is probably not their rock bottom price. However, because of reduced profit margins, they are going to cling to that price for as long as they can. It doesn't really matter to them now - they have sold the bulk of the properties on the site, you say, so they can afford to wait a while.

I wouldn't expect them to drop the price again (if at all!) until the site is completed and there is only 5 or so properties left unsold. At which point they will most likely throw more incentives at it, like upgraded kitchen/bathroom, landscaping to garden, decoration, curtains, carpets etc, rather than reduce the price much (because it is more cost effective for them to do that).

Here in Cardiff, where the housing market is pretty bouyant, new developments are not selling out very quickly. There are two or three recently completed developments which have had "Last Few Remaining" signs up for months, and the prices are not changing. In fact, one development which had sold most of its properties in 2010 still had two for sale three months ago, and the prices hadn't dropped at all.

Mukk2k3

Thanks for the input.

To be honest im expecting them to ring back today rejecting the offer. But hoping to come to a compromise of around 129,000 - 129,500 with them putting in the wardrobes and the laminate flooring as the house is currently up for 129,950.

As they are already supplying carpets in the price I hoping the laminate flooring will not be to much of an issue but the fitted wardrobes are supposed to be £400 each but I know it won't cost them that much to put them in.

Just hoping they will be open to a bit of a negotation from them.

Mukk2k3

Offer rejected.

They are willing to put in the fitted wardbrobes in both bedrooms and do the laminate flooring but they want the full asking price of 129,950.

Unsure what to do next now. Said that I need to speak to mortgage company as I don't even think I can borrow that much.

May tell them that the max we can borrow is based on 129,000 so that is the final offer and we have had verbal agreement and are ready to proceed straight away - so that is the final offer im afraid.

Views?

liubeliu

Sounds like a builder who doesn't have a cashflow problem otherwise would have accepted £129,000 to get the bank off its back. Like someone else has said, your best hope is that it doesn't sell and once build complete has occurred they want to offload so it can move on.

liubeliu

Also, if the agents has more than one buyer interested then this might also be why the builder is not budging and is wait for the first party to offer asking price or even a non FTB so it doesn't have to gift the 5%.

liubeliu

Mukk2k3 wrote: »

Offer rejected.

May tell them that the max we can borrow is based on 129,000 so that is the final offer and we have had verbal agreement and are ready to proceed straight away - so that is the final offer im afraid.

Views?

I wouldn't, gives the wrong message on chances of getting mortgage as you would not have gone down the full application process so chances of proceedable sale to completion is 50/50. Also they may force you to use its preferred broker as condition of accepting offer.

Mukk2k3

Thanks for the input.

Yeh probably not wise telling them that 129,000 is the max we can borrow given what you said - hadn't really thought about that.

They don't seem to be budging at all on the price and looking at past sales they haven't budged on any of them either.

May conisder saying that we will meet them halfway at 129,250 and that is the final offer.

They seem to not mind giving the extras put don't seem very negotiatable on the price.