Can Higher upfront payment be used as a price negotiation tool for a new home?

effem

Looking at a new home in warwickshire. If I pay a higher amount upfront, i.e. 40% instead of 15%, does it help in haggling with the builder or is it only beneficial for the mortgage interest etc?
Sorry this might be a first time buyer question and hence sounds stupid even as I finish typing it out!! :rotfl: but I overheard someone that if the builder needs cashflow, he prefers a higher upfront payment. But my argument was that the builder (seller) will get the lump sum from the bank as well so it wouldnt make any difference to him... ?
Any help / advice will be appreciated. Im dealing with Taylor Wimps and Barratt.
:beer:

Notmyrealname

The builder doesn't care as the only thing that bothers them is what is on the cheque that arrives in the post.

Your solicitor sends the cheque after receiving money from you and the mortgage company. You don't pay your lump first and then the rest when the mortgage company sends it.

Fire_Fox

You'd be mad to pay a higher deposit, you could lose the lot if you fail to complete. You'd also be mad to give a substantial deposit to a builder with cashflow problems.

kingstreet

The deposit is lodged with the solicitor at exchange and the builder sees nothing until completion, so it's irrelevant either way.

effem

Fire_Fox wrote: »

You'd be mad to pay a higher deposit, you could lose the lot if you fail to complete. You'd also be mad to give a substantial deposit to a builder with cashflow problems.

Thanks for the reply all of you. Yes I wouldve imagined that this wouldnt affect the builder / seller at all.

So on what point or pointSSSS would the seller of a new build negotiate on the price?
- Save on the construction loans they are paying for?
- If I can seal the deal and get everything arranged in 2 weeks rather than 6?
- Any other pointers on haggling with New Build sellers?

Ive read a couple of threads about this on MSE but didnt find too much I could make sense of... so far I have only got "quick timing" on my side... what else could I exploit?

And Fire Fox... sorry I sounded ignorant but I didnt know which money goes where and when but I never thought of handing over a big deposit to the builder before I was 10000% sure of everything else being taken care of in terms of the mortgage agreement, solicitor etc.

Does anyone have a kinda flowchart of how a home buying procedure should work? I know all the initial stuff abt finances and looking for a home... just the actual procedure after I make up my mind to get XYZ home. According to me, it is as follows:


Decide on property...
Hire property evaluation chap (Required for New Builds??)
Negotiate with Builder (HELP for new build!!!)
Agree Sale... in my head and sort of loosely with estate agent
Hire mortgage advisor + Arrange Mortgage
Hire Solicitor
Pay smallest deposit possible to get property off the market
Hopefully mortgage is arranged by now...
Complete legal stuff (Solicitor)
Move in!

Allright... now you may all start the @r$€ whooping I expect... but please try to focus on the core question of What are my leverage tools for Negotiating on a New Build
Thanks Chaps!!

kingstreet

House purchase process runs like this;-

Offer agreed
Solicitors instructed
Sales memorandum issued by agent/developer
Purchaser applies for mortgage
Vendor's solicitor prepares and issues draft contract
Vendor completes seller's enquiry forms and returns to solicitor
Valuation/survey carried out
Purchaser pays solicitor for searches
Searches requested
Renegotiation of price due to survey findings - if required
Mortgage offer issued
Purchaser's solicitor receives seller's enquiry forms and raises any enquiries
Searches returned
Responses to enquiries
Purchaser visits solicitor to go through paperwork, hand over ID and deposit
Contracts exchanged with completion "on notice"
Completion takes place after build finally finished.

The order might be a little out in one or two places and some things can take place concurrently, rather than consecutively to save time. It's not specifically designed for newbuild. I've added in places to reflect the difference.

I never thought of handing over a big deposit to the builder before I was 10000% sure of everything

You don't. You pay a reservation fee to the builder. Your deposit is paid to your solicitor and is transferred to the builder's solicitor where it is held until completion when the rest of the funds to purchase the property are transferred over.

br3nnan

If you were dealing with a small, local house builder your large deposit may alleviate cash flow problems for them. But for someone the size of TW/Barretts the sums involved would be a drop in the ocean.

When we bought our new home (bovis) last year, negotiation tools included an imaginary second hand property, purchasing at the end of the year and the start of a new phase on the site

Jimbo1976

TW and Barratts (like a lot of companies) tend to work on quarterly, half yearly and annual targets. So if you are able to find a site where they need to shift a few houses to hit their target they will be keener to give discounts at the end of a quarter rather than at the start.

effem

Double triple quadruple thanks mate!

But ... can you explain these 2...

br3nnan wrote: »

- purchasing at the end of the year and

- the start of a new phase on the site

:beer:

br3nnan

effem wrote: »

Double triple quadruple thanks mate!

But ... can you explain these 2...



:beer:

When we got ours, Bovis had just finished what they called "phase 2"; a load of houses built in one area of the site. They wanted to start Phase 3 in a different area of the site so were trying to sell the remaining few before they could move on.

We also bought just before christmas, a time when I'd imagine many people wouldn't want the hassle of moving hence the market being slower and Bovis more likely to want a sale.

That's my theory anyway. Resulted in a over 10% reduction in price as well as the turf/carpets/ceramic tiling/dishwasher/washing machine and upgraded fittings :j

RabbitMad

kingstreet wrote: »

Your deposit is paid to your solicitor and is transferred to the builder's solicitor where it is held until completion when the rest of the funds to purchase the property are transferred over.

This isn't correct. On a lot of new builds the deposit is released to the builder upon exchange, they then use it to complete the property. This is all fine except when its not, several people buying off plan found that they'd lost their deposits when the builders have gone bust - I'm sure there was a daily mail article on it some time ago.