New buyer - mostly cash - advice

the_commandante

Hello everyone,

Having just escaped London and moved 'up north' I find myself in the position of finally being able to buy my own home so am exploring a range of options.

Having saved a decent pot of cash that I could do nothing with in London, I'm now looking at 2-3 bedroom houses which I could afford with little or no mortgage. I'll be viewing both new build 'off plan' or newly available as well as several that have previous owners, although given constraints on both my time and DIY ability I'm erring towards the former.

My questions are

- what are the pros and cons of buying new build/off plan vs previously owned?
- am I in a strong bargaining position given that I can pay mostly by cash up front, and if so, what % discount is a good starting point for negotiation?
- is my negotiating stance weakened with new build? I heard that they prefer you to get a mortgage because they can take a cut, and that they're more confident of sales so will hold out on price

Any advice would be much appreciated

agrinnall

There's little additional bargaining power as a cash buyer in terms of the price, your strength is that you are more likely to be accepted by a seller, although having never bought a new build I can't comment on whether this is the same in that case. It's unlikely that a new build developer would get a cut of a mortgage except in the few cases where it is arranged through them, which isn't generally advisable.

I would point out that most mortgage providers have a minimum amount that you can borrow, so if you don't have enough cash you may find that you have to borrow more than you actually need.

hazyjo

the_commandante wrote: »

Hello everyone,

Having just escaped London and moved 'up north' I find myself in the position of finally being able to buy my own home so am exploring a range of options.

Having saved a decent pot of cash that I could do nothing with in London, I'm now looking at 2-3 bedroom houses which I could afford with little or no mortgage. I'll be viewing both new build 'off plan' or newly available as well as several that have previous owners, although given constraints on both my time and DIY ability I'm erring towards the former.

My questions are

- what are the pros and cons of buying new build/off plan vs previously owned?
- am I in a strong bargaining position given that I can pay mostly by cash up front, and if so, what % discount is a good starting point for negotiation?
- is my negotiating stance weakened with new build? I heard that they prefer you to get a mortgage because they can take a cut, and that they're more confident of sales so will hold out on price

Any advice would be much appreciated

In my opinion...


- new builds are often marked up on price. You often have to buy a lot as extras. Social housing nearby may make it harder to sell. You may be living on a building site. Often on small plots with small rooms. Garages or shared spaces may be leasehold/subject to service charges. Some say they're not as solidly built and the soundproofing can be slightly iffy! Some developers are better than others. The houses/estates aren't established yet so you don't really know what works and what doesn't, or what the current neighbours might be like.
- it would probably make you the more favourable buyer (I'll be in a similar position this year), but I doubt it'll enable you to get any more of a discount!
- I would use an independent broker and solicitor so not sure - they'd not be getting a cut from me.


Lots of new builds won't drop on price (or very little). You're better off going through the extras and seeing what you can get for free.


Jx

ThePants999

Generally speaking, people can get mortgages. So, faced with a choice between a buyer who doesn't need a mortgage and is offering a lower amount, or a buyer who does and is offering a higher amount, most vendors will go with the latter.

However, mortgages can cause delays, so faced with a choice between a buyer who doesn't need a mortgage or a buyer who does, when both are offering the same price, most vendors will go with the former.

Hence, being a cash buyer improves your position, but doesn't typically get you a discount.

glasgowdan

No extra discounting power as a cash buyer at all sadly! Good luck finding what you're after

xylophone

I'm erring towards the former.

A big mistake?:)

Cakeguts

I don't know where you are oop north but the market in some places is very different to London. What might be very appealing in London flats, terraced houses, houses with no off street parking is not nearly so appealing in some places oop north.

See if this is the case where you are looking and it will give you a good idea of what is popular and easy to sell should you ever want to move. Have a look at how many 3 bed semi detached properties there are that have driveways that go down the side of the house. The down the side of the house is important because it tells you if there is ever going to be room for a garage. Integral garages are fine as well. If the market is flooded with 2 bed houses for sale this tells you that most people can afford more than a 2 bed.

Second owner new houses are easier than new houses because you should be able to negotiate to buy the curtains, floor coverings and light fittings. You should also get a garden that has some sort of attention.

the_commandante

Thanks, that's very useful. I've got a day of appointments for both types tomorrow ��

csgohan4

Cash buyers also have less to lose, they can pull out anytime and gazunder easier than a mortgaged buyer, as they would need to alter the amount borrowed and go through the process again

kinger101

hazyjo wrote: »

In my opinion...
Garages or shared spaces may be leasehold/subject to service charges

Some developers are now selling the houses as leasehold. It's possible to buy the freehold as well for a few thousand more, but if you don't do it at the time, the craft boggers sell it on to another company who'll then charge you £30,000 for it when you decide you need it to sell the property on.

https://www.theguardian.com/money/2016/oct/29/new-builds-house-buyers-leasehold-property-trap

https://www.theguardian.com/money/2016/nov/05/ground-rent-scandal-engulfing-new-home-buyers-leasehold

hazyjo

Some developers have been selling new build houses as LH for years. Wouldn't touch 'em myself. Why would anyone not buy the FH when buying? If a LH house is worth less than a FH one, maybe the £30k isn't so off. I really don't know without seeing figures and comparing similar FH property sales... I take newspapers with a pinch of salt.

Jx