What is the Best negotiation stand point ? (New Build)

dukesy_2

HI everyone

I have been reading a lot of threads on here regarding the "overpricing" (according to some!) of new build properties.

Let me give you a "heads up"

We have seen a stunning newbuild on a very select development in an area in which we would like to live. Property is a 3 Bed 3 Storey semi on a development of only 10 houses (small builder).

The "asking" price of the property is £232K, but the AGENT (not builder) selling it has intimated that the builder is
a) Desperate to get a sale for cashflow reasons
b) Doesnt have any "confirmed" sales yet (showhome only been opena month)

The agent told us that the builder has 10% or so to "incentivise" buyers. He is "also in a position" to cover our stamp duty.

The burning question is this :

HOW best to negotiate the maximum discount possible, and what "leverage" to use to do so

I am NOT trying to screw the builder, before anyone gets antsy !!!! I am merely trying to establish what others percieve to be reasonable to ask for (carpets etc ?)

Also, given that other comparable properties (although there are no IDENTICAL (cos he hasnt sold any!)) have gone for 190-210, is this a reasonable "starting point" ?

I would be intertested to hear the views of others MSE'rs.

If it makes any difference, we are in a position to commit rightaway and should be able to get our sold at reasonable rate within the build time

dolce_vita

dukesy wrote: »

...I am NOT trying to screw the builder......,

Not sure how to handle the negotiation - I'll leave that to someone with experience of this.

I'm just wondering why you don't want to "screw the builder"?
They would do it to you in a rising market.

dukesy_2

dolce_vita wrote: »

I'm just wondering why you don't want to "screw the builder"?

Because i appreciate that they have to make a profit to maintain the standards that I expect, and that I need them to be around for the next few years (rather than being driven into the ground and cease trading) to snag etc if required.

I am NOT expecting anything for nothing, but I am interested in getting the best value possible

IHateDida

I am in a similar position but my offer has been accepted and I can't back down on it - wish I'd started lower! The house was on the market for £xk and we got it down to £xk with stamp duty paid and £500 for our legal fees. But my advice would be not to use their recommended solicitors - if they offer any legal discounts as they are usually more expensive and not entirely in your favour! I've definitely learnt my lesson!

I would start low as possible - £190k? If you'd had an offer on yours you would be percieved as a stronger buyer - is yours on the market yet? I know this one isn't built yet but that doesn't matter.

The fact that they haven't any offers yet might go against you in the long run - if they don't get many sales, they could lower the price in the end - and thats the risk of buying 'off plan'. The only benefits are that you will have more of a say in the fixtures and fittings.

Look at other developments they have done nearby - what was the asking price and what did they sell for?

Start as low as you can - they can only say no. But don't appear too desperate - the site foreman from the site we're buying from said they developers sell for £x amount, a third of that is the land cost, a third is the cost of building the house and a third is profit. So on your house if they sell at the max they will be making around £70k profit - so you have this to 'play around' with!!!!

dukesy_2

Ours IS on the market, but the builer has offered a "assisted sales" scheme.

Basically he gets 2 EA's to market it on our behalf (at OUR asking price!) but he will pay fees.

If there is no joy within (say) 6 weeks, then we will discount our by £x and he will discount the newbuild by the same £x.

BUT : This will probably come out of the "Available discount pot" (fees and discount)....

So if he has (say) £20K to play with, he will offer this but the dicsount i will get will be £20K - EA fees - Reduction on mine (if that makes sense)

Otherwise, I will just sell as a standalone and renogotiate accordingly.

What I am trying to establ;ish is how big that "pot" is likely to be in the first place....

IHateDida

Work on a third profit - £70k - but how much they have to play with will depend on their targets. I was also going to go down the assisted purchase scheme but luckily I found a buyer who offered me full asking price a day before it was going to take place as they operated on a 6 week selling price - they basically wouldn't give me what the 2 EA's were valuing the property at - £3.5k below. If you can sell your own house you will be in a much stronger position to negotiate as their assisted buyer scheme will be taking some money out of your negotiation "pot".

If you sell your own house I reckon you could offer £200k and it will be accepted, but that depends on the market conditions in your area of course.

Gorgeous_George

If you are a cash buyer, I would pitch in at a 30% discount. If you have to wait for a mortgage but are first time buyers, go in a 25%; if you have to sell first but have a potential buyer lined up try 20% and finally, 15% may be the best you could hope for if you haven't yet marketed your property.

The builder will lose more if no-one buys than if you ease his profit margin for him.

It's his gamble, not yours.

Just 0.1% commission for me please :rotfl:



GG

dukesy_2

Hmmmm 20% sounds like a LOT !!! (46K!)

do you guys REALLY think that that is realistic ????
(I will be more than happy if it is !!!)

mybrainhurts

Don't worry about the builder's profit margins. It is not your job to maximise his profits or minimise his losses.

Don't regard the asking price as a "starting point" from which huge discounts can then be deducted. If the house is worth £200 000 offer that sum. Don't settle for £210 000 on the basis that it represents a huge £22 000 discount. The selling price of similar local houses is an objective fact rather than one set at the whim of the vendor. It is a fallacy to suggest that there is a "discount pot" which should feature in your negotiations.

Watch Dispatches on Channel 4 on Monday (about overpricing of new houses I understand from other threads on this site). Ask the vendor and the agent whether they will be watching. Offer to video it for them.

Don't be in any hurry. The builders position is bad and will not be getting better any time soon.

cats!

Watch Dispatches programme on Monday before committing to anything! It's not just about inflated valuations, it also covers poor construction and the underhand way developers work!

Are you facing a penalty clause for not exchanging contracts within a certain timeframe?? What happens if you accept an offer on your property and the buyer pulls out? Or a full structural survey shows the new build is gerry-built?

Run a mile ...

cats!

Oh! Forgot to mention - don't assume that the sales people are your friend! They ain't.

Take whatever they say with a pinch of salt.