Haggling price of new build

daverave7

Hi, Persimmon homes are currently building in an area which we would really like to move to. The list price of the house we want is £279,995. We could go in as a cash (non part ex) buyer. I was wondering if anyone has any experience in haggling the price of a new build (especially Persimmon) home? What can I realistically expect to pay? How best to haggle and how much should my first offer be?

It's difficult to gauge the market in the area as there have not been many sales of late. Nor do they come up for sale. For similar size houses, not new build, have been sold for £230 K to £280 K, but most of these sales were around 5 years ago.

littlesparkles

I am buying a new build and the builder would not negotiate on price at all. This is because the site is selling well and it's important to the builder to keep the price paid high if there is still lots to be sold on the site. However the builder was open to giving incentives so we effectively secured a discount this way. We have 5% deposit paid, estate agent fees paid, purchase legal costs paid, removal fees paid and stamp duty paid. This is with another builder.

daverave7

littlesparkles wrote: »

I am buying a new build and the builder would not negotiate on price at all. This is because the site is selling well and it's important to the builder to keep the price paid high if there is still lots to be sold on the site. However the builder was open to giving incentives so we effectively secured a discount this way. We have 5% deposit paid, estate agent fees paid, purchase legal costs paid, removal fees paid and stamp duty paid. This is with another builder.

5 % deposit paid and stamp duty for £280 K is worth in excess of £20 K. So quite a good discount I think!

pawlala

Ask for the freehold. It saved me £5000.

littlesparkles

Yes we are happy with the deal. It's worth a bit less than you say to us though as we are in a lower stamp duty bracket! :-) From discussions I have had with the sales rep, it seems that the recorded price paid is very important as this is what appears on the land registry list and can affect the prices on the whole development. Incentives don't affect this. Are you aware that some lenders do not like incentives though? We have 15% deposit (20% when the builder's 5% is included) but many lenders wouldn't consider us due to the incentives we had been given. We are going with Nationwide but Santander and Accord were also willing to give us an offer. Our current lender would not....

daverave7

littlesparkles wrote: »

Yes we are happy with the deal. It's worth a bit less than you say to us though as we are in a lower stamp duty bracket! :-) From discussions I have had with the sales rep, it seems that the recorded price paid is very important as this is what appears on the land registry list and can affect the prices on the whole development. Incentives don't affect this. Are you aware that some lenders do not like incentives though? We have 15% deposit (20% when the builder's 5% is included) but many lenders wouldn't consider us due to the incentives we had been given. We are going with Nationwide but Santander and Accord were also willing to give us an offer. Our current lender would not....

Thanks! Yes, I'm aware lenders might consider the selling price as 95 % of recorded price should the builder gift 5 %.

Our deposit is only 10 %. I'm hoping that this won't throw up any issues. There do seem to be some good 90 % LTV deals on the market but not sure if these apply to new homes? There's always the NewBuy scheme which persimmon offer, but I'm not sure if this would mean less other incentives?

Fire_Fox

Look at the area, look at larger and smaller houses not just similar sizes to gauge value. Five years ago is next to useless. It's also worth running an advanced search, questions about offers on new builds come up several times a week.

TastyTeeth

daverave7 wrote: »

Thanks! Yes, I'm aware lenders might consider the selling price as 95 % of recorded price should the builder gift 5 %.

Our deposit is only 10 %. I'm hoping that this won't throw up any issues. There do seem to be some good 90 % LTV deals on the market but not sure if these apply to new homes? There's always the NewBuy scheme which persimmon offer, but I'm not sure if this would mean less other incentives?

You'll find that most lenders won't lend more than 85% LTV on a new build, so you'll most probably end up using NewBuy which offers between 90-95% LTV.

However, this could give you a problem with your incentives potentially. This is because the builder would have to put aside 3.5% of the purchase price as part of the NewBuy incentive. This effectively acts an an indemnity should you default on your mortgage, with the government making up the difference to your mortgage provider. This means they won't be out of pocket in the event of a default.

The 3.5% becomes one of your builders incentives, meaning there will usually be less then available for further incentives.

droiderm

My wife and I will be going down the NewBuy route.
I would be interested to hear anyone elses experience with negotitating with a NewBuy.

How long does the builder have the 3.5% tied up? Is it till the house is sold? Or is it until the mortgage reaches a certain LTV?

Halifax on a NewBuy will not allow any cash incentives from the builder. I think extras (carpets etc are fine) and negotiating the price down (but not the builder giving you 5k for example cash without taking it off the selling price).

pinkteapot

Best way to negotiate is to wait until the house is complete. Builder will become desperate for their cash. You won't get anywhere if you're looking at buying off-plan.

A friend of mine bought a new-build that had initially been listed at £249,995. He bought it when it had been finished for a couple of months and it was two months before the builder's financial year-end. He paid £168k. However, this was a smaller regional builder rather than one of the big national ones.

Back in 1990 my parents also got a good discount on a new-build that was finished though (something like £200k down to £160k).

droiderm

Our issue is there are around 6 houses on the development of the house type we like/can afford.
We think this house offers the best value for money, so we may end up having to buy off plan. Otherwise it will be a risk in terms of not getting one of those houses. However the site isn't actually open yet, but I want to be prepared with what our plan is going to be.

This particular builder's year end is March 31st. Even if we buy off plan, would that be in a position to negotiate? If so, do their numbers count on exchange, or would we have to complete by their year end?

I think if we got carpets appliances and a little bit off the price, we would be happy, but would be nice to take them for everything we can!