Cash buyer - New builds - over priced?

Ddayno

Hi
Im a cash buyer - i have no mortgage on my current property and once sold will be able to use the funds from the sale plus savings to purchase a new property outright with no mortgage.
Ive been told new builds are over inflated by about 15-20% to allow for the 'help to buy' scheme....does this mean there is negotiating opportunities on the prices? The builder seems reluctant but i wondered if anyone has any experience of this?

anselld

Cash buyer is of no particular benefit to a new build developer.

Possible advantage if vendor is desperate for a quick sale, but lots of supposed cash buyers seem to drag heels and/or gazzunder after agreeing the deal so vendors tend to be wary anyway.

The only real advantage to cash is for difficult to mortgage property such as auction/renovation.

justjohn

New builds are overpriced for what you get. Build your own..

Mutton_Geoff

"Cash buyer" has no real meaning since a mortgage lenders money is the same colour as yours and will reach the vendor in the same way.



Since you have a property to sell, you're not as attractive to a vendor as you may think since you're in a chain.


As for selling price, everything is negotiable, it just depends on how desperate the vendor is to sell to you.


What is important is a no nonsense buyer who is quick to move. Having everything in place is more important so you will be in a stronger position with contracts already exchanged on your sale. Until then ... join the queue.

PasturesNew

The developer gets 80% from you and 20% from the Govt so can shift their houses to people who couldn't afford it any other way.... so they're naturally overpriced.

I've just seen a small development of five houses drop their prices from £315k-£325k all down to £300k this weekend. Ultimately they still need to sell them to somebody and pay off their loans before they go bankrupt for not repaying them, or before they can finance their next development... so even some of those can be forced to be realistic.

If you build 5 houses and advertise them, then have an Open Day and you've still got 5 houses to sell it sends out a message: "These are not worth that price when compared to other houses people could buy instead".

RelievedSheff

In this instance cash is not king.

You really wont get much discount from a developer as they know that someone with a mortgage or help to buy will be along shortly with a better offer.

Crashy_Time

PasturesNew wrote: »

The developer gets 80% from you and 20% from the Govt so can shift their houses to people who couldn't afford it any other way.... so they're naturally overpriced.

I've just seen a small development of five houses drop their prices from £315k-£325k all down to £300k this weekend. Ultimately they still need to sell them to somebody and pay off their loans before they go bankrupt for not repaying them, or before they can finance their next development... so even some of those can be forced to be realistic.

If you build 5 houses and advertise them, then have an Open Day and you've still got 5 houses to sell it sends out a message: "These are not worth that price when compared to other houses people could buy instead".

Certainly does, and sentiment can change in a heartbeat.

societys_child

A new build carries a premium, just like a new car. You can get around this if you buy second hand . .

AdrianC

Ddayno wrote: »

Ive been told new builds are over inflated by about 15-20% to allow for the 'help to buy' scheme...

But what do YOU think, comparing newbuild with non-newbuild...?

If you think <--- this property is 20% overvalued compared to ---> this property, taking all factors into account, why would you not buy the better value one instead?

So, since HtB isn't part of it for you, it comes down to how much price premium you are willing to pay for the shiny-shiny factor.

does this mean there is negotiating opportunities on the prices? The builder seems reluctant but i wondered if anyone has any experience of this?

Just pause and ask why the vendor would accept 15-20% less from one particular buyer, purely because of that buyer's financial setup?

Remember, prices aren't set by some abstruse theoretical formula. They're set by buyers being willing to pay that price. If the vendor can get £x, why would they accept £0.8x?

Cakeguts

You are not a cash buyer. A cash buyer is someone who has all the money in the bank to buy the property without having to sell the one they are living in now.



What you have written in your OP says that you have to sell the house you are living in now to get the cash to buy the next property. That is not a cash buyer that is a buyer who doesn't need a mortgage on their next purchase. The point about a cash buyer is that they don't have to rely on a sale and that is why they may get a discount. You are not in that category you are in the same category as someone who is selling a property and needs a mortgage because it makes no difference you still have to sell something to get the money to move.



Cash buyers sometime get discounts because there is no chain. They can go to buy a house and pay for it without being dependent on a sale so the purchase can be a lot quicker. You can't do this because you have to sell your house.



It is extremely annoying if you are selling a house to be told by someone that they are a cash buyer only to find out later that they aren't because they are depending on selling their current home to get the money to buy the new one.



What you are is a buyer who doesn't need a mortgage for your next house. Not a cash buyer.

AdrianC

Cakeguts wrote: »

You are not a cash buyer. A cash buyer is someone who has all the money in the bank to buy the property without having to sell the one they are living in now.
...
It is extremely annoying if you are selling a house to be told by someone that they are a cash buyer only to find out later that they aren't because they are depending on selling their current home to get the money to buy the new one.
...
What you are is a buyer who doesn't need a mortgage for your next house. Not a cash buyer.

They are a cash buyer - in that they don't need a mortgage. They are paying with 100% equity. 0% LtV.
They just aren't a chain-free cash buyer...