New build purchase - extras on top of part-ex?

charlesh

Hi,

My wife and I are seriously looking at using the part-exchange option to sell our current house (midlands, worth about 230k) to buy a new build in Hertfordshire (on the market for 299995). We're currently renting in the S.East, and with one thing and another we think the time is right to make a move down here.

The house we're looking at is finished, but it and it's next door neighboor are available and have been for a few weeks at least. These houses represent one of the few remaining from the builder's first phase (Twigden homes). The whole site will be finished mid-2007. There are 7 other developers on the same site, so competition is quite hot between them.

Just like to canvas opinion on how hard a bargain you can drive given that we're keen to use the main incentive of part-exchange? Does an initial offer of £270k sound unreasonable??? We're not so fussed about getting the gardens turfed or needing carpets/appliances fitted. Having Stamp Duty paid would be nice though!

Also does anyone have any experience of Twigden homes?

Thanks,

Charles

Happy_saver_4

I would make no offer until Twigden had revealed what they would offer you for the property you wish to px with them. What matters to you is the total financial difference between the two props.

Personally never heard of Twigden homes. But if you do a Google search you'll find they are part of another group etc and this interesting? grumble Twigden home grumble

nrsql

Depends what situation the developer is in and how they have priced the property but 10% + stamp duty sounds high for an offer - it's the sort of offer I would expect them to make and you should be aiming to get them down as much as possible from there.

terrierlady

why would you offer before they have said they will accept yours?and at what price?
They may decide not to go ahead with your home once they see the valuation reports etc, we don't accept every home that enquires about p/x.
Wait and see what their offer is before you attempt to negotiate.
No, I don't work for this developer.

Doozergirl

With part-exchange, developers will require that the property you buy costs 25 or 30% more than the property you part-ex, therefore an offer of £270,000 won't be accepted, you're looking at the property you buy costing £286,000-£299,000 if you want £230k for yours.

Also, I think the deal with part-ex is that although you get full market value for yours, they won't give you any discounts, extras etc. so although you don't feel like you're being charged, you are.

It's worth trying of course, but I wouldn't expect too much.

Good Luck though!

Trophy160

Hi,

Just been through all of this. The price that the developer will give you
for your house will be a 6 week sale price. This the price at which they
will be able to sell the house for within 6 weeks. This will usually be
lower than the price that you have your house on the market for.

The developers are currently not keen on this approach as the housing
market in slow (to say the least) at the moment.

If they do take a house in part exchange they generally do not give any
extra discount. They view the discount as you not having to sell you house
and hence not pay any agents fees.

There favoured way forward is for you to be procedable, in that you have
a completed chain. In this case you are in the strongest position. In
a p/x deal they are in the stronger position.

Hope this helps


Paul;

Happy_saver_4

Builders will only give you things because the property is being sold to you at above it's current market value.

You actually pay for these gifts in the long term when you come to sell. You will make less capital gain when selling due to your purchase of the property at above it's market value prevailing at that time.

terrierlady

as stated before elsewhere, we don't pull a sale price out of a hat, p/ex price is 6 week sale price, developers are not house buyers so we do try for a back to back sale, with regard to the price of our homes, the square footage determines what the house sells for, all property is compared size
wise , area, location to other homes on the market then we arrive at the release price.
Usually homes built by a good developer carry a premium when being sold on the open market, good gains can be made if you are among
the first or last purchasers on a development.
There are people that invest in new developments in order to make a quick profit, having brought from plan upto a year ahead in the case of homes around cardiff bay area.

janmolby

Doozergirl wrote:

With part-exchange, developers will require that the property you buy costs 25 or 30% more than the property you part-ex, therefore an offer of £270,000 won't be accepted, you're looking at the property you buy costing £286,000-£299,000 if you want £230k for yours.

Has anyone got any further info on how the 25-30% margin works? If for example my home is worth £100k and I'm after a new build on the market at £140k. Under the scenario, would the developer be willing to drop to an offer of around £130k? Or is the an unanswerable question whch depends on more than just this percentage requirement?

Hope that makes sense! Thanks

terrierlady

is this not having your cake and eating it? P/Ex is normally the incentive and no other discounts from the developers asking price, you will be offered the average of the three valuations from local independent estate agents, it will be a 6 week sale price that your offered as explained early on.

charlesh

Hello everyone,

Thanks for the replies so far. The developer is in the process of obtaining the valuations, so we'll see what offer they make for our current house.

Appreciate all the advice given, but we'll see how much interest there is in the two houses available at the weekend. They are completed now, so I think there may be room for negotiation even when the developer comes back with a price.

Another option for us is to wait until December time and put on offer in for one of the phase 2 developments in it's off plan state. I'm guessing this is a slow time for house purchases, so a cheeky offer might just be accepted.

I'll keep you posted.

Thanks again,

Charles