New Build - how to negotiate this one

laurendan

Looking for some advice from experience...!

We have seen a new build which is the last house on a fairy small development. The house is nearly finished and is available as the previous buyer 'pulled out' a while ago as apparantly their circumstances changed.

We love the house but as always - it's the price!

developer wants £700k whereas the same type house on same development sold for £565k 18 months ago - according to Zoopla that house would be worth £605k now

So that still leaves 95k adrift to justify - the plot we are looking at is better for the following reasons:

1) Much bigger plot
2) Not overlooked
3) Specification upgrade vs other house (appliances, finishings etc.)

Developer is telling us that the last purchaser (that later pulled out) reserved for £639k and later there was a spec upgrade (detail of this I don't have)

Developer is saying they don't do big discounts and yes there would be some movement from 700k but 'not much'

So I am after some guidance as to how to negotiate this and where this should end up! I'm thinking the £639k final price as this is what someone else was prepared to reserve it for.

the other thing on our side is that we have NO CHAIN as we are currently in rented plus the house is nearly finished..

Thoughts ??

jonnygee2

"Developer is telling us that the last purchaser (that later pulled out) reserved for £639k and later there was a spec upgrade"

What kind of 'spec upgrade'? How big is this place? Initially it seems difficult to say how a new build could have 70k worth of upgrades. A few new appliances and some surfaces is not worth 70k.

If this is your home for the next 30 years, go up to what you are happy with and what you can afford. If you are possibly moving in five years, think a lot more carefully about where the market is at. New builds are already overpriced because of help to buy, and when you come to sell the 'spec upgrade' could well have expired (new appliances and surfaces will be old surfaces and appliances).

Either way I'd start by offering £639 and take it from there.

franklee

How long ago did the previous buyer pull out? If it was a couple of weeks ago then the builder may want to test the market a bit longer. If it was a couple of months and is still not sold maybe more leeway.

When is the developer's financial year end? Any chance they want to get it wrapped up by then?

If buying with a mortgage is your deposit big enough so you can absorb any quibbles on valuation. Or are you a true cash buyer? I'd emphasise any good points in that along with your offer.

Also you are in rented, are you in a fixed term or periodic tenancy? Am asking to determine how much notice you need to give your landlord. Also worth including with your offer if it's short. Not so great if you are locked into a fixed term with months still to run and no break clause.

Also are the upgrades to your taste and how much are they worth to you?

laurendan

jonnygee2 wrote: »

"
What kind of 'spec upgrade'? How big is this place? I

Quartz worktops, SMEG appliances (not sure of anything else though!) - nearly 2,400 sqft

Cakeguts

Forget Zoopla it is always wrong. Also a second hand new house often fetches less than a new house on the same development. The builder obviously thinks that they can get someone to pay near to £700k

jonnygee2

"Quartz worktops, SMEG appliances (not sure of anything else though!) - nearly 2,400 sqft"

Well if it's just the worktops and some appliances, that's about 5k surely? Plus they took out the old ones which were already in the 639k price. Sounds like they are taking the !!!! to me.

They may have sold other plots on the development for the amount they are asking, or they might have made a strategic decision that they are able to hold out for a good few years if needs be so aren't in a rush. Depressingly, developers still sometimes price not to sell, where they believe value rises over time will be good for them.

I'd be wary of overpaying if you may need to resell at some point, as when you do you might not have the developers luxury of being able to overprice and wait.

buggy_boy

I would go along the lines of finding out what the upgrades are and then saying, thats fair enough but we wouldnt be that interested in those upgrades so they are of little value to us....

Start off low, you can always go up, its a game but remember unlike a normal vendor a developer will be less likely to be offended, I think it might be a stretch to get it for £639k if prices have gone up in value. Start off around £615k, use the other property and zoopla valuation as the reason you have come to this offer, stating you are offering more because its a larger plot but that the upgrades are of little value to you, nice to haves but you wouldn't pay much for them... They will come back and say no, try to get them to come up with a price, what ever they come up with say "Oh no thats too high we could maybe offer a bit more but we need to be closer than that, we can offer X"

Its a game, hold your nerve...

laurendan

Thanks everyone....will go in low, negotiate hard using whatever facts I have and see where we end up!

Crashy_Time

laurendan wrote: »

Looking for some advice from experience...!

We have seen a new build which is the last house on a fairy small development. The house is nearly finished and is available as the previous buyer 'pulled out' a while ago as apparantly their circumstances changed.

We love the house but as always - it's the price!

developer wants £700k whereas the same type house on same development sold for £565k 18 months ago - according to Zoopla that house would be worth £605k now

So that still leaves 95k adrift to justify - the plot we are looking at is better for the following reasons:

1) Much bigger plot
2) Not overlooked
3) Specification upgrade vs other house (appliances, finishings etc.)

Developer is telling us that the last purchaser (that later pulled out) reserved for £639k and later there was a spec upgrade (detail of this I don't have)

Developer is saying they don't do big discounts and yes there would be some movement from 700k but 'not much'

So I am after some guidance as to how to negotiate this and where this should end up! I'm thinking the £639k final price as this is what someone else was prepared to reserve it for.

the other thing on our side is that we have NO CHAIN as we are currently in rented plus the house is nearly finished..

Thoughts ??

The figures don`t seem to be believable to me, and if they are you will be looking at hefty negative equity in the future if you go ahead.

ashe

They are someone elses upgrades, if that person paid for them to go in and pulled out surely the builder would have invoiced them for the spec upgrades as many post on here asking for advice once this has been done? Either way someone elses taste not yours, just say those upgrades have no value to you and its just the house you are interested in else you will look elsewhere.

buggy_boy

Crashy_Time wrote: »

The figures don`t seem to be believable to me, and if they are you will be looking at hefty negative equity in the future if you go ahead.

Ignore this fool, his reply to everything is its over priced...

The mortgage company will do a valuation, they are becoming quite cautious, if the valuation is lower than your offer you can always renegotiate...

To show how silly Crashy's post is, the OP has not said anything about how much mortgage they would need if they even need one... Crashy... Negative equity is when you owe more than the house is worth... Unless you somehow know how much mortgage the OP is going to need how do you get to the idea they will be looking at hefty negative equity?...

Crashy you say the OP "will" be looking at "Hefty negative equity", this can only be based on a big crash, nobody knows if or when there will be a Crash..