Is This Gazundering - New Build Purchase Underway?

annetheman

Hi - if anyone has any experience with negotiating new builds, your opinion is greatly appreciated on the below!

The EA who has exclusive marketing rights of the new build development I am buying on has just updated the remaining 10 (out of 29) units to include a £2,000 "incentive upon completion" -- this would cover my legal fees very nicely.

Since I am already in the process of buying (I have offer accepted, solicitor instructed, searches almost completed and mortgage valuation underway):
-can I ask to be given this incentive too, even though it was not advertised/part of the deal when my offer was accepted? Is this gazundering?
-since the flats will be approaching 1 year on the market in June, plus fallout from COVID-19, do I have a strengthened position from which to perhaps adjust my offer to the developer, by about the same amount as the incentive i.e. £2K?

I'm not sure if I have the same bargaining power since I am buying Shared Ownership and also under *normal* circumstances, S/O new builds would fly off the shelves...

Thank you!

SallyDucati

You could adjust your offer if you haven't exchanged,  but the developer might not agree to it.  You would then have to either pull out or continue at the agreed price.  
On my small new build development, some people paid £15k more than me, others £12k less, depending on when they bought.  As time went on prices went down until all were sold (took about 18 months for 27 houses).  But it was the best plots that went earlier.

annetheman

SallyDucati said:

You could adjust your offer if you haven't exchanged,  but the developer might not agree to it.  You would then have to either pull out or continue at the agreed price.  
On my small new build development, some people paid £15k more than me, others £12k less, depending on when they bought.  As time went on prices went down until all were sold (took about 18 months for 27 houses).  But it was the best plots that went earlier.

Thanks for this - sounds like the developer may be looking at a similar time frame to yours to sell them all ~12-18 months. I would like to think £-2K wouldn't be a lot for them to agree to as an adjusted figure, given that this incentive is now being offered to others buying after me.

As this is my long-term home, I don't think that I would feel too hard done-by if other people get it for £+10K less than I do in the coming months; I'm continuing with the sale because I love the place.

I'm wondering if the current COVID-19 situation could be advantageous though... Given the uncertainty of people's jobs/the economy* for the foreseeable future - they might be more keen to at least secure a sale that is already close to exchange, even though I'd offer slightly less -- or is that wishful thinking?

*I'm assuming popularity will wane down, not increase...

diggingdude

Try and see. Be nice when asking and mention reasons

AdrianC

You've agreed to buy a property for a price, and are going through the legals.
Now you want to reduce the price you pay the vendor.

Is that gazundering? Yes, that's exactly what it is.

Will they agree? <shrug>
If they don't, are you prepared to walk away?

annetheman

AdrianC said:

If they don't, are you prepared to walk away?

I wouldn't, no - I would still happily pay the price currently agreed. The world is a different place than it was in Feb though thanks to 'rona. 

You've agreed to buy a property for a price, and are going through the legals.
Now you want to reduce the price you pay the vendor.

That was the second option. The first option I mentioned was to ask the developer for the £2,000 incentive they're now offering to buyers. NOT to reduce the selling price. Is that gazundering?

homeless9

I was wondering if people are now offering less no matter where they are at in the buying process..... the world economy is doomed now. UK has started shutting down. I would think it's likely that sellers would accept lower offers.

Davesnave

New houses. The costs are roughly as follows:

1/3 land

1/3 materials & wages

1/3 profit

Within the latter there is usually room for negotiation and adjustment. What else you call it is irrelevant.

AdrianC

annetheman said:

AdrianC said:

If they don't, are you prepared to walk away?

I wouldn't, no - I would still happily pay the price currently agreed. The world is a different place than it was in Feb though thanks to 'rona. 

It's the same place. There's a slightly different set of short-term operating conditions, but it's the same place as it was.

You've agreed to buy a property for a price, and are going through the legals.
Now you want to reduce the price you pay the vendor.

That was the second option. The first option I mentioned was to ask the developer for the £2,000 incentive they're now offering to buyers. NOT to reduce the selling price. Is that gazundering?

Same difference. Whether it's -£2k on what you pay, or pay the same but get £2k thrown in... It's the exact same thing.

annetheman

AdrianC said:

annetheman said:

AdrianC said:

If they don't, are you prepared to walk away?

I wouldn't, no - I would still happily pay the price currently agreed. The world is a different place than it was in Feb though thanks to 'rona. 

It's the same place. There's a slightly different set of short-term operating conditions, but it's the same place as it was.
It's the exact same thing. 

The place is the same as it was in Feb, the UK economy - indeed, the world economy - is not and I don't need to explain to you that you need to look at the entire marketplace as well as the house itself when making any reconsideration about your offer. 

We really don't know how "short-term" these operating conditions are, that's the point - none of us has a crystal ball, there has never been any financial threat like this, ever in history.

I might soon find out from the developer whether waiting for another buyer is worthwhile risking that waiting out the "short term" to sake £2K actually amounts to longer than expected, therefore higher costs overall.

I've been told that the definition of gazundering is lowering your offer whilst in the process of a sale. Can you tell me how lowering my offer in the process of the sale is the same as keeping my offer the same and asking for the same "additional incentive" now being offered to all buyers

Please explain like I'm 5 - thanks for your help

annetheman

Davesnave said:

New houses. The costs are roughly as follows:

1/3 land

1/3 materials & wages

1/3 profit

Within the latter there is usually room for negotiation and adjustment. What else you call it is irrelevant.

Ah, useful to understand the general ratio although I won't know their exact figures so just have to guess! I don't think £2K incentive is an issue for them since they're offering it on all the remaining flats, so that's what I'll ask for!