Offer accepted on new build flat - red flag?

ThisIsWeird

I have had an EA negotiate a £1k discount on my very first property, but for a different reason; mine was to catch the seller, and yours is to seemingly catch the buyer!. This was in '93, when house prices had crashed and I had my pick of flats, and even some houses, in Guildford for the ~£50k mark. Buyers were rare, and when the vendor for this one place procrastinated, the EA told them (without me knowing), 'not only are you unlikely to get any more, but I know the buyer is keen on other places, so I'd actually knock off £1k or you'll lose him...'. Since the flat was only £52k, and my salary only around £15k, one extra 'k' meant a lot. Great flat, terrific EA - I bought him a bottle of whisky, and still remember his name - Robert Napper :-)

In your case, PPaN, I suspect it's like you suspect - these flats are not selling easily at the asking prices, and the EA wants to catch you for this sale with this 'minor' discount, rather than having to negotiate larger ones with you and other potential buyers.

These things are a 'game', and it's entirely up to you how you wish to play it - with the ever present risk that you may lose, of course.

Being a new-build, they should be built to the latest standards, and should also have low maintenance costs for the near future. Against that, you need to check things like lease length (surely loooong?), ground rent and maintenance charges etc. Any ideas of the reputation of these builders - do a good surf and see if their 'flats' in particular are well-built, nicely sound insulated, etc.

If you are happy with the flat and your potential purchase, then by all means compare yours with the others for sale, and tell the EA you want another £x off - if you can justify it like that, then there should be no argument. The developer either accepts or doesn't. You either accept or you don't. And both can negotiate. Do NOT be harangued by the EA - if they are being too 'assertive', then just say so; look a bit 'taken aback', and say truthfully, "I'm really not comfortable with the pressure I feel I'm being put under." Look at him/her until they blink.

As for their choice of conveyancer, the same applies - yes, they'll almost certainly be getting a kick-back, but that doesn't mean they are not good conveyancers. We went with an EA's recommendation on a recent near-purchase, when we found our preferred conveyancer had already been nabbed by the vendor. The EA recommended one across the street, and we were happy to go with that as they already had a decent reputation in the area. It was only after the conveyancer sent through their docs that we realised the EA was going to receive a sizeable kick-back - over half their actual 'professional' fees! And, since the fees were reasonable, it meant they were doing the task for a pitiful sum - I guess they must weigh it against the increased trade?!

So, again, do your due diligence - check out the conveyancer, and their reputation. If you are 'happy' with them and their fees, then I personally see no real reason to not go with them - they are legally bound to act on behalf of YOU. And if this does help to smooth a slightly reduced extra couple of £k reduction off the offer price via the EA, then you have 'played the game'. And hopefully won.

Another thing to remember - a few £k difference in the selling price of a property means next-to-now't to an EA; they'll be on ~1% (I dunno?) commission, so will already be getting the vast bulk of their money from the sale, regardless of any small tweak in the final price. What they want to do is SELL SELL SELL, and move on to the next property and the next buyer. Yes, they will always want to 'get as much as possible' for a sale, as this is good for their reputation and egos, and developers will be more likely to choose them, but it means little for their immediate pockets. For them, personally, a few £k up or down on the sale price is largely immaterial - it's ~1% of that difference = peanuts. What they will probably quite like, tho', is the dead-easy £ewhundred extra earned from recommending a conveyancer. Knowing this, I think what I would do is to check out the conveyancer to make sure they are reputable (almost certainly they will be), and agree to their choice IF they are happy to submit a reduced offer to the developer. "I'm looking at a few places, but I do like this flat. I've noticed, tho', that others in the same/similar/nearby blocks have been typically selling for £xk less, so I think this one is still a bit over-priced; I'm not sure if I should hold out for one of these other ones to come on, or even just see how the market changes over the next few months? I dunno... I'd probably go for this flat if, say, they could reduce it by a further £xk - what do you think? Oh, thanks for the conveyancer recommendation - yes, I'd be happy to go with them..."

BUT, you need to be totally happy about playing it like this!

BobT36

eddddy said:

So you could indicate that you'll use the EA's recommended solicitor until your offer gets accepted, and then "change your mind".

Unfortunately they wanted us to actually sign-up with them, before we'd even viewed the property lol. As it turned out we didn't even make an offer on that one.

diggingdude

I've seen estate agents claim to have negotiated a discount before, seemed to be they were hoping potential purchasers wouldn't negotiate further seeing that. 
Ask the estate agent what their commission is with the solicitor and ask them to split it? That will shut them up

PlsProvideAName

An update on this:

I "paused" the offer for a few weeks after everything that had happened.  I've now re-engaged the EA as I'm considering this flat again as an option and it is still available.

One thing that I forgot to check the first time around was the date of practical completion for the flat.  It turns out to have been around mid-November 2021.  This means that the initial defects coverage period of the warranty only has around 7 months left, and assuming I could complete within 3 months, that would leave around 4 months after moving in.  Does anyone know how much of an issue this is?  Or if it should be used as a basis for further negotiation?

Sarah1Mitty2

PlsProvideAName said:

Hello all,

I recently made a below-asking offer on a new build flat. The offer was accepted, but additionally the estate agent told me that he had negotiated a slightly lower price
(by £1K) with the developer.  Has anyone ever encountered something like this, and could it be a red flag?  The only reasons that occur to me for this reduction are that mortgage lenders may be valueing similar properties below what I asked, or that the developers are desperate to sell quickly as there may be a glut of similar properties in the area and they're worried I might bail on the purchase in favour of one of the others.  The property (and other similar ones) has been on the market a while and the developer seems very keen to sell it ASAP.

Also, the estate agent has a recommended solicitor which they claim will be able to get the legal work done much more quickly since he's worked on many other properties in the development. There doesn't seem to me to be a clear consensus whether using an estate agent's recommended solicitor is good or bad, though it is fairly tempting in this case.  Does anyone have any thoughts on this?

The developer will be expecting prices to drop further and wants to get some stock sold, your decision if you think it is worth it, but it could be much cheaper in future.