New Build Negotiation

Captain_Tom

Hi, I am sure this has been asked before but doing a bit of a search and there are only historical/out dated replies when the housing market wasn't doing so well!


Anyway we have found the perfect house which is listed as £244k, we are first time buyers with a £40k deposit. Basically my question is can we negotiate on new builds? and if so by how much percentage wise? the house is on a nice estate however it looks like it will eventually grow to a fairly large estate. My concern is that we may buy the house and then struggle to sell and/or make money on the sale due to the newer houses being available.

kinger101

They've very unlikely to negotiate on price, particularly while other properties are still being built, as they don't want discounts appearing on Land Registry data. They are however likely to negotiate on finishes. Better carpets, tiles, worktops etc. They get these at trade cost so it doesn't always cost them much more.

Yes, you will lose money on the "new build premium", and it may be difficult to sell while other properties are being built on the estate. For one, supply v demand. And secondly, your house will be compared to shiny new ones, with new kitchens, bathrooms etc, which buyers have some option of customizing before they're finished.

Nobody buys a new build to make money. If you want to make money, you need to add value, e.g., by renovating an old property. While there is a premium on new builds, remember you're getting everything new, which includes NHBC guarantee.

It's just a matter whether its suitable for your longer term plans, and whether you prepared to accept an immediate drop in equity on completion. It might be a problem if you want to move in a couple of years, but if you plan to stay say 5 years or more.....

Captain_Tom

I read that you could negotiate around 10% off but I wanted to check before looking foolish, ideally I would want to get around 10k off the house.


As for selling the property, if all went to plan, this would be my long term home. I wouldn't see this as something I would want to sell purely for a profit. It is just my concern that getting on the property ladder, I would want my investment to at least hold its value so when it did come to selling it, we have not lost out.

kinger101

Captain_Tom wrote: »

I read that you could negotiate around 10% off but I wanted to check before looking foolish, ideally I would want to get around 10k off the house.


As for selling the property, if all went to plan, this would be my long term home. I wouldn't see this as something I would want to sell purely for a profit. It is just my concern that getting on the property ladder, I would want my investment to at least hold its value so when it did come to selling it, we have not lost out.

Well, there's nothing wrong with asking for a discount. Don't ask, don't get, as they say. It's just that it's unusual, and perhaps you should go in prepared to negotiate on something else if they say no.

If it's a long term home, I wouldn't worry too much about new build premium. It's hard to put an exact value on it, but over a long period of time, it becomes less significant.

Captain_Tom

why is it unusual to negotiate on a house?

kinger101

My point was it's unusual for a developer to accept a lower price on a new build. They're only likely to do this if there's a downturn in the market, it's one of the last few on the estate, or they have lots of inventory (finished homes).

raino144

i would go in hard with an opening bid of 200, and use it as a negotiating tactic. You will then find out what they will come down to (be it 210, 215, 220)... I got 14pc off my new build as a result a couple of years ago.

Captain_Tom

thanks for the reply raino, has any one else had any luck with negotiating?

kinger101

^^^
The only way you'll find out if it will work in your case is to try it. The decision about whether any reductions are possible is likely to have been made up high. The one thing you have going for you as that compared to a owner-occupier, at least the person with whom you're negotiating will have zero emotional attachment to the house. In that sense, it's rather harder to offend them with a low offer.

Don't let them know your maximum (for example by showing them an agreement in principle).

Have you checked whether sold prices for any of the development are available yet?

http://houseprices.landregistry.gov.uk/

Captain_Tom

Yes, thank you for that, I have had a quick look however as houses are being advertised off plan it is hard to find comparable sales and also do not have a postcode to check current sales.

So any one else with any other advice?

pawlala

You have good grounds to negotiate if the valuation report values it at lower than the developer's asking price... but that probably requires you to be a little further down the process than you actually are.