New build reservation/exchange/completion

SharkMoney

I am looking at buying a miller home new build but I am currently waiting for mine to sell and so unable to pay reservation.

The way I understand it, is that if we have a buyer then Millers will accept a reservation fee and expect us to exchange within 28 days. What I don’t understand is what constitutes an exchange? Would everyone in the chain have to exchange at the same time? Isn’t this timescale impossible with a chain?

Or, does it mean that somehow we need to pay a deposit to their solicitor by exchange date and then complete once the rest of the chain are ready? If so how much would the exchange deposit be? Could we use cash savings if our buyers are not ready to exchange?

Similarly, what happens if we want to reserve a property that is not available until 6 months time, do we find a buyer, exchange contracts with buyer and use buyers deposit to exchange on millers and then once complete, we go into rented but know that the miller home is ours?

bucksbloke

Exchange means exchange of contracts. Pretty impossible with a chain but not impossible if you sell to an FTB. 

Tomg84

You may struggle to meet their deadlines. Depending on how well the houses are selling they may be fairly relaxed about the 28 days if they're seeing progress to exchange. It can be hard to buy a new build if you're in a chain but not impossible. Does the developer to part exchange?

HanPop

We have just bought with Bellway and they never pushed with the 28 day deadline and were happy as long as things were progressing with our sale and purchase. To be honest they have been v good to us as we didn’t have a straightforward purchase so we can’t complain. A friend of mine recently purchased a Miller Homes house and they were very pushy about meeting this 28 day deadline and kept threatening to pull out even though everything was going as quickly as it could. They got the house in the end but it was a stressful time for them.

SharkMoney

Tomg84 said:

You may struggle to meet their deadlines. Depending on how well the houses are selling they may be fairly relaxed about the 28 days if they're seeing progress to exchange. It can be hard to buy a new build if you're in a chain but not impossible. Does the developer to part exchange?

Yes part ex offered but 12% reduction compared to median estate agent valuations. 

Sammyd159

Hi, I sell new builds and have worked for many developers although not Miller. The reason there is a 28 exchange deadline is so the developer has the right to remarket the property if the exchange hasn't taken place.  Without a deadline, these things could drag on.
If you have a house to sell, there is no way you will meet this deadline as the chain has to exchange the same time as you or before. You have no control over the solicitors in the chain, and believe me, solicitors work at their own pace!  Also, you really ought to have some security that your chain is all proceeding well, before you hand over your reservation fee. I always advise my purchasers to wait until their buyer has a mortgage offer (not just an AIP) and has instructed solicitors and searches and that the sale is progressing.   
In terms of flexibility on the 28 days, this all depends on where your sale is at by the deadline, if you are a week  or 2 from being ready then they may will extend rather than take a new purchaser and cancel your reservation. It depends on the popularity of the development and your relationship / communication with the sales consultant.  if you are doing everything you can when you can, and delays are not your fault then you are less likely to be penalised.  
There are benefits to part exchange which might outweigh any loss in the purchase price:
1. You get to stay in your own home until the new one is ready.
2. You have a guaranteed buyer, Miller aren't going to pull out at the 11th hour because their relationship has broken down / seen another house / don't like the covenants in the deeds etc etc.
3. You may be able to offset the loss in valuation by asking for a discount on the purchase price and / or customer upgrades. 
If the plot you are looking at isn't the best plot or they need to sell it for year end / half year end then there is a deal to be done.  Big builders have decent dealing margins. The sales people know exactly what they can give away.  The only time you might struggle is if you are buying in a high demand location. 
Other option is to put your house on the market at a competitive price to attract a buyer quicker.  You haven't said how long you have been trying to sell your house. Consider whether reducing your price puts you near what the Miller PX offer might be, if so then the PX route might be better. 

SharkMoney

Sammyd159 said:

Hi, I sell new builds and have worked for many developers although not Miller. The reason there is a 28 exchange deadline is so the developer has the right to remarket the property if the exchange hasn't taken place.  Without a deadline, these things could drag on.
If you have a house to sell, there is no way you will meet this deadline as the chain has to exchange the same time as you or before. You have no control over the solicitors in the chain, and believe me, solicitors work at their own pace!  Also, you really ought to have some security that your chain is all proceeding well, before you hand over your reservation fee. I always advise my purchasers to wait until their buyer has a mortgage offer (not just an AIP) and has instructed solicitors and searches and that the sale is progressing.   
In terms of flexibility on the 28 days, this all depends on where your sale is at by the deadline, if you are a week  or 2 from being ready then they may will extend rather than take a new purchaser and cancel your reservation. It depends on the popularity of the development and your relationship / communication with the sales consultant.  if you are doing everything you can when you can, and delays are not your fault then you are less likely to be penalised.  
There are benefits to part exchange which might outweigh any loss in the purchase price:
1. You get to stay in your own home until the new one is ready.
2. You have a guaranteed buyer, Miller aren't going to pull out at the 11th hour because their relationship has broken down / seen another house / don't like the covenants in the deeds etc etc.
3. You may be able to offset the loss in valuation by asking for a discount on the purchase price and / or customer upgrades. 
If the plot you are looking at isn't the best plot or they need to sell it for year end / half year end then there is a deal to be done.  Big builders have decent dealing margins. The sales people know exactly what they can give away.  The only time you might struggle is if you are buying in a high demand location. 
Other option is to put your house on the market at a competitive price to attract a buyer quicker.  You haven't said how long you have been trying to sell your house. Consider whether reducing your price puts you near what the Miller PX offer might be, if so then the PX route might be better. 

Hi thanks for that useful info!

They will not budge. They have offered 3% discount on purchase price - that was without me asking. I’m since asking for stamp duty on top which makes it 7% and they won’t do a deal. 

eddddy

SharkMoney said:

Similarly, what happens if we want to reserve a property that is not available until 6 months time, do we find a buyer, exchange contracts with buyer and use buyers deposit to exchange on millers and then once complete, we go into rented but know that the miller home is ours?

Yes - you could go into rented, unless you can persuade your buyers to wait 6 months between exchange and completion.

Plus there are often delays on new builds, and there will probably not be a fixed completion date. You'll just be given 10 days notice to complete, when the house is ready. (Not forgetting that mortgage offers usually only last 6 months.)

If your buyer is an FTB, you might be able to negotiate a deal along the lines of... 'I'll accept a low offer from you, if you can exchange contracts within 28 days, and don't mind waiting about 6 months for completion, with completion on 10 days notice.'.

If the price is good enough, they might accept it.  I guess you could factor the rent you'd save into the discount.

Otherwise, you'd need to move into a rental temporarily.

Sammyd159

Hi thanks for that useful info!

They will not budge. They have offered 3% discount on purchase price - that was without me asking. I’m since asking for stamp duty on top which makes it 7% and they won’t do a deal. 

Was that with the part exchange? 
Is there a particular plot you are desperate for or can you wait? 
The other option is to sell and move into rented, it puts you in a better position to not stress over the exchange deadline, as then it is achievable, and also you might be able to negotiate harder as they aren't buying your house in at risk of losing money on it.
The best time to get a deal is on houses that are in their forecast for half year and year end completions. For Miller homes this is June / December.  Downside to buying these plots is that they are often rushed.  I personally would never buy a house for a December completion, they are built in the cold and wet and will get more shrinkage, and everyone is shut over Christmas so sorting issues is difficult. June completion half year plot is a better bet.
Make sure sales know how serious you are, and maybe sit it out, if they get to April and have plots they need to get in for June, you might get a better deal even with PX.  It's all hard to judge though as I don't know the market of the site you are looking at.

SharkMoney

Sammyd159 said:

Hi thanks for that useful info!

They will not budge. They have offered 3% discount on purchase price - that was without me asking. I’m since asking for stamp duty on top which makes it 7% and they won’t do a deal. 

Was that with the part exchange? 
Is there a particular plot you are desperate for or can you wait? 
The other option is to sell and move into rented, it puts you in a better position to not stress over the exchange deadline, as then it is achievable, and also you might be able to negotiate harder as they aren't buying your house in at risk of losing money on it.
The best time to get a deal is on houses that are in their forecast for half year and year end completions. For Miller homes this is June / December.  Downside to buying these plots is that they are often rushed.  I personally would never buy a house for a December completion, they are built in the cold and wet and will get more shrinkage, and everyone is shut over Christmas so sorting issues is difficult. June completion half year plot is a better bet.
Make sure sales know how serious you are, and maybe sit it out, if they get to April and have plots they need to get in for June, you might get a better deal even with PX.  It's all hard to judge though as I don't know the market of the site you are looking at.

Yes that is with the part ex. In my head I have written off what I’m losing on the p/x and just looking as if I have a smaller deposit. 

They originally told us that the house must be completed for March for their figures. What does that mean for your June/December thing?

I’m hoping to wait it out and come end of feb they will be more willing?!!

SharkMoney

We want this particular plot cos it suits us  timing wise and plot aspect is perfect