Reserved New Build - Identical House Much Cheaper

GDB2222

In your position, I would definitely be prepared to back out unless the developer gets very close to £300k. It's a bit optimistic to expect the military discount on top, but there's definitely no harm asking. Military discount is obviously a marketing gimmick, and you need to look at the bottom line.

So, ask for the works. £300k price, less military discount. And, once they have agreed the figure, tell them that you expect the stamp duty and lawyer fees paid.

Incidentally, it's better not to use the developer's recommended solicitor.


"It was listed cheaper because the buyers had to cancel right before completion at the last minute."

I assume that the other buyers actually cancelled before exchange? Anyway, that would be you then, as you're not far off exchange. So, you cancel, and they'll bring the asking price down to £300k. Then you can offer based on that.

MrsKH92

From what I understand, they were due to complete end of December but the house was listed on 18th December so about 2 weeks prior. We have previously been informed that we should complete by end of February so it is getting very close indeed.

The house next door is currently being advertised at £319,950 which was the original cost ours was advertised on - but it's been on there for quite a while so maybe they will reduce that too.

In the email I received this morning, they plainly said they couldnt go to £299,950 but didnt say what they could reduce to. If they said £305k I think we would proceed but probably no lower than that.

Am not sure if this makes a difference but it is not our "forever" home but we would probably want to stay for perhaps 5 years.

Linton

Of course you can ask for a reduction. However I think you would be letting emotion over-ride rationality were you to back out of the deal if your request was turned down:


1) The difference in cost prices wont make any difference in the long run. The house will be sold for whatever houses of the same size/layout/location/decorative order etc etc sell for in the area. A buyer wont go for the cheaper house purely on the basis that the owner paid less for it.


2) You liked the house and were prepared to pay £315K for it. Has this actually changed? Let's try a question: supposing an identical house became available at £315K half a mile away. Would you also decide to not buy it at that price?


The reason to go ahead with the purchase is that you could be resetting your life back 6 months or more with the ongoing stress and hassle. Also you dont know whether you will find anything better.

GDB2222

MrsKH92 wrote: »

From what I understand, they were due to complete end of December but the house was listed on 18th December so about 2 weeks prior. We have previously been informed that we should complete by end of February so it is getting very close indeed.

The house next door is currently being advertised at £319,950 which was the original cost ours was advertised on - but it's been on there for quite a while so maybe they will reduce that too.

In the email I received this morning, they plainly said they couldnt go to £299,950 but didnt say what they could reduce to. If they said £305k I think we would proceed but probably no lower than that.

Am not sure if this makes a difference but it is not our "forever" home but we would probably want to stay for perhaps 5 years.

Just in case it's not clear, exchange is when you sign the contract and irrevocably agree to buy the property. You normally pay a 5-10% deposit at that time. Completion is usually a month after that, when you pay for it and move in.

If you are planning to move on in 5 years, be aware that you are probably paying a premium price for this property, even if you get it for £300k. When you come to sell, you can't hope to match the developer's marketing splurge. Nor can you offer a buyer HTB. It will also be a secondhand home. For example, all the appliances will be secondhand.

You should think about the resale price as being a good 10% or more lower (£30k) than you are currently paying, although the final price will reflect general movements in property prices in your area, up or down.

Retired_Mortgage_Adviser

Putting the two together below, 5 years is not a very long time and in your place I would seriously consider the status quo, save on all the transaction costs (and very likely potential capital loss) of buying and selling a new build property inside 5 years, keep saving and looking.

Buying an overpriced new build with the intention of selling in 5 years (without any of the tools like HTB which inflated the price in the first place) only makes financial sense if you're buying in an early/mid-2000s east London kind of booming property market (and that's with the benefit of hindsight).

Maybe make a final offer of 300k and pull out if the developer declines.

MrsKH92 wrote: »

....our current home is adequate (and cheap) so I am tempted to just stay here until we find a close to perfect deal.

MrsKH92 wrote: »

Am not sure if this makes a difference but it is not our "forever" home but we would probably want to stay for perhaps 5 years.

MrsKH92

Thanks everyone - it's been a real rollercoaster but I think we have decided to only proceed if there is a reduction.

This is because firstly we find it a little unfair that an identical property has sold for cheaper, but also because we dont plan on living there for a very long time - only about 5 years and so upon selling we might actually end up making a loss.

We both feel disappointed of course but I think we both just got so excited about buying a house that we maybe didn't think completely logically at times (which is completely normal I think).

Definitely would appreciate any further comments or advice though- I informed the developers I wont give them a final decision until Monday.

harz99

Wanting to move in circa 5 years, and the other identical house having been sold for a fair few grand less would be the killer for me.

We were looking to move to a new build bungalow mid 2019, went to px our current town house which was a new build nearly 5 years ago, only to be offered significantly less than we expected (we expected to take a hit of 5-8% anyway).

Two of the EAs who did the valuations for the builder actually said that their valuations would be low due to the last 2 identical houses to be sold at the development where we currently live, doing so at 17% less than we paid for ours, and that was what we were offered as PX value!

If the builders will not budge down to £300k walk away, keep saving and keep watching until you find something else, especially monitor developments that are nearing full completion with a few houses left unsold.

AdrianC

MrsKH92 wrote: »

This is because firstly we find it a little unfair that an identical property has sold for cheaper

Would you find it unfair if one of the other identical houses had sold for more than you'd agreed to pay?

but also because we dont plan on living there for a very long time - only about 5 years and so upon selling we might actually end up making a loss.

That's going to happen anyway - it always does with newbuilds, for the reasons that GDB explained, unless it's a steeply rising market. Then it's merely a much smaller gain...

RelievedSheff

MrsKH92 wrote: »

Thanks everyone - it's been a real rollercoaster but I think we have decided to only proceed if there is a reduction.

This is because firstly we find it a little unfair that an identical property has sold for cheaper, but also because we dont plan on living there for a very long time - only about 5 years and so upon selling we might actually end up making a loss.

We both feel disappointed of course but I think we both just got so excited about buying a house that we maybe didn't think completely logically at times (which is completely normal I think).

Definitely would appreciate any further comments or advice though- I informed the developers I wont give them a final decision until Monday.

Life is rarely fair.

Look at the sold price data for any new housing estate and you will find massive price variations for what are essentially the same house types.

I have just been looking at the sold data for our estate and there are huge differences. One pair of semis's had one side sold at £215k and the other half £200k.

The four bed detached houses have sold for prices ranging from £230k to £250k for the same house type on similar plots.

This estate is not out of the ordinary in this sense. Every new development has variations in prices. The developers are still building on our estate and they have different prices for different plots of the same house type which vary some 10% in price.

At the end of the day it will of course be your choice what you do but as the developers have already said that they are unwilling to drop to £300k it does look like you will be dropping out of the sale. Were you ever really that committed if you are willing to lose the house over a small percentage of the purchase price?

MrsKH92

I do completely agree with you AdrianC - its just good luck that the other family got the house cheaper really but I didnt really about how new builds depreciate so much to start with and then appreciate eventually (my own fault for just getting excited about a house I really liked honestly).

However it has made us think a bit more logically about it all now.