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  • FIRST POST
    Blueforever
    New Build purchase issue
    • #1
    • 20th May 09, 9:12 AM
    New Build purchase issue 20th May 09 at 9:12 AM
    A quick note (which I'm sure will make some of you laugh) to pass on an experience but to also ask for some help.

    I've been trying to take advantage of the current property price crash to purchase a newbuild property - price recently reduced, part exchange on my current property agreed, a nice big 4 bedroom house.

    The problem is that the bank have valued the new house at a massive 20% below the asking price from the developers. The developers are refusing to move on the price (blaming the bank for being unreasonable) and refusing to refund me the fee's paid to date.

    To date I am out of pocket by over 1000 in reservation fee's, survey costs etc.

    Does anyone have any advice?

    Also I've got a nasty feeling that I've been "had" by the developer. Getting me to sign all these agreements concerning paying reservation fee's (non-refundable) then once the valuation came in they have washed their hands of me.

    I've issued a Small claims court judgement against them this week stating that they had overvalued the property, been unreasonable in refusing to lower the price, etc etc.

    Any help????
Page 1
  • chickmug
    • #2
    • 20th May 09, 9:28 AM
    • #2
    • 20th May 09, 9:28 AM
    Not sure what the law is these days but when I was in new build our solicitor told us there is no way we could keep reservation deposits if the person pulled out. Same in my more recent years in agency. Can you ask your solicitor todays position because, as far as I am aware, nothing has changed.
  • Blueforever
    • #3
    • 20th May 09, 9:51 AM
    • #3
    • 20th May 09, 9:51 AM
    I haven't gone to a solicitor yet - part of me doesn't want to throw good money after bad money. But the various pieces of paper they made me sign kept saying non-refundable. I just didn't expect a 220k house to be valued at 175 by the nationwide!!!

    I was hoping the threat of court action would persuade them to refund me something. There is also a 380 valuation fee with the Nationwide that they don't care about.

    As I mentioned in my first post - part of me wonders if this is how they are operating - a few 500 deposits each week, sales fall through (they didn't seem suprised when mine did)
  • chickmug
    • #4
    • 20th May 09, 10:13 AM
    • #4
    • 20th May 09, 10:13 AM
    Sorry I don't feel able to offer more advice but sure others will come along throughout the day.

    Except on the deposit paid where I know an agent, who is a friend, who takes deposits and all the paperwork says None Refundable. His solicitor has said it is out of order but he ignores that advice. Whats more he was about to join the NAEA until he realisd his deposit taking would be against their rules.

    So unless someone comes along, like Richard Webster the solicitor who posts on here a lot, and says different myopinion is it is not legally binding.

    Glad to see you are taking court action.
    • lonestar1
    • By lonestar1 20th May 09, 12:50 PM
    • 546 Posts
    • 475 Thanks
    lonestar1
    • #5
    • 20th May 09, 12:50 PM
    • #5
    • 20th May 09, 12:50 PM
    Lose 1k or 45k I know which one Il'd prefer. If it helps think of it as saving yourself 44k
  • JayneG
    • #6
    • 20th May 09, 1:04 PM
    • #6
    • 20th May 09, 1:04 PM
    Oh god, this could be me later on today. Our valuation took place on Monday on a new build 4 bed detached and I am waiting anxiously for the resuts.It has already been reduced by 23% and is looking like good value compared to the other 'second-hand' homes in the area, but whether the lender will acknowledge this or whether they will stick to the "new builds are always overpriced" (regardless of any reductions) mantra, we shall see!If it is the latter, then I too shall be out of pocket to the tune of approx 1200 :-(
  • chickmug
    • #7
    • 20th May 09, 1:25 PM
    • #7
    • 20th May 09, 1:25 PM
    Hi again Blueforever

    Just in and time to read your post again and would say I really don't think, apart from deposit back, you will have a leg to stand on. The law doesn't say that any developer should only ask a sensible market price for their home so the onus is very much on the person buying (buyer beware) to make the decision is it fair value.

    Now and again, when selling for clients, a potential buyer has arranged an independent valuation before offering but this has been on the higher end of the market.

    Also I would of expected the developer to have prevalued the house/s and had a finance source that would of lent in accordance with this up front valuation.

    So my view is you will get very stressed and I know of no angle by which you will get more than the deposit back:confused:
  • Blueforever
    • #8
    • 20th May 09, 1:26 PM
    • #8
    • 20th May 09, 1:26 PM
    I hope the 4 bed detached house wasn't in the Ellesmere port area!!! Your story is the same as mine - the builder had already dropped the price but the mortgage provider was still 20% out. And I can't afford to lose out on over 1000. The sad thing is that I think the builder expected the valuation.

    They quickly agreed to pay for another valuation which I refused (they wouldn't answer my question as to what if the next Valuation came in lower than their price - would they accept it or would they keep taking valuations forever)

    The sad thing is that they were quite happy to take their reservation fee's and dump me. Hence why I'm asking for advice as I want to try and get the money back (or at least some of it)
  • Blueforever
    • #9
    • 20th May 09, 1:28 PM
    • #9
    • 20th May 09, 1:28 PM
    So my view is you will get very stressed and I know of no angle by which you will get more than the deposit back:confused:

    I'd be more than happy just to get the deposit back - but they are arguing that the fact it was reserved for me meant that this could have prevented sales to other people!!!
  • ad44downey
    - the builder had already dropped the price but the mortgage provider was still 20% out.
    Originally posted by Blueforever
    In reality, it is the builder who is '20% out' rather than the mortgage lender.
    Krusty & Phil Madoff, 1990 - 2007:
    "Buy now because house prices only ever go UP, UP, UP."
  • Blueforever
    In reality, it is the builder who is '20% out' rather than the mortgage lender.
    Originally posted by ad44downey
    I agree with that completely which is why I'm so annoyed at the home builder (wainhomes) who I feel:

    -Exagerrated the asking price making a mortgage impossible
    -Failed to offer any sort of resolution to this issue
    -then held onto my "reservation fee"

    I even used their own nominated mortgage provider.

    I was wondering if anyone had similar experiences or any idea on how to resolve the situation
  • nervousftb
    I agree with that completely which is why I'm so annoyed at the home builder (wainhomes) who I feel:

    -Exagerrated the asking price making a mortgage impossible
    -Failed to offer any sort of resolution to this issue
    -then held onto my "reservation fee"

    I even used their own nominated mortgage provider.

    I was wondering if anyone had similar experiences or any idea on how to resolve the situation
    Originally posted by Blueforever
    sorry if this sounds rude (it isn't meant that way) but surely it is a case of buyer beware? presumably you agreed to pay a certain price for the house, but now the mortgage company is valuing below that you are blaming the builder? the builder can ask whatever they like for the house, if you agree to pay that then the onus lies on you to ensure the house is actually worth it. the builder has no responsibility to ensure that the price is reasonable, or to help you resolve the issue. the moral here is new builds are highly over-exaggerated in price, so bargain with the builders BEFORE you pay any reservation fees.
  • Yakubu22
    I've been looking at some Wainhomes new builds near me (South Warrington). They are grossly over priced. For example a 4 Bed Semi priced at 270k when you can get an older (with bigger gardens and better location) 4 bed for 180k+.
    Your story does make me more apprehensive about even giving them a ring to have a look round one of their developments.
    • terrierlady
    • By terrierlady 20th May 09, 2:22 PM
    • 1,721 Posts
    • 539 Thanks
    terrierlady
    Most new homes developers I work freelance for, DO return fees but did you use the FA for the development as they are used to down valuations on new builds, most valuers now value at second hand prices as they have been instructed to do by the big building soc, so what is the problem who have you spoken to have you stopped at the sales neg or gone to the sales manager then Director than even higher, customer care starts at pre reservation stage so make sure you start yelling and very loudly.
    We do get valuations done at the start of the development and when the valuer comes out are able to show comparables to them.
    my bark is worse than my bite!!!!!!!!
  • Blueforever
    Most new homes developers I work freelance for, DO return fees but did you use the FA for the development as they are used to down valuations on new builds, most valuers now value at second hand prices as they have been instructed to do by the big building soc, so what is the problem who have you spoken to have you stopped at the sales neg or gone to the sales manager then Director than even higher, customer care starts at pre reservation stage so make sure you start yelling and very loudly.
    We do get valuations done at the start of the development and when the valuer comes out are able to show comparables to them.
    Originally posted by terrierlady
    I did use their own financial advisor - he recommended the Nationwide "as they understood the new build market"

    I'd already got the price down substantially (10%) but for the bank to value it at another 20% lower was a huge shock.

    I've taken the complaint to director level. They do not care. They even came out with a classic line of "if the house had been priced at 175k then I wouldn't have even throught of buying it originally" They just kept saying there would need to be a new survey.

    They have point blank refused to refund the reservation fee's - despite the fact they put the home back on the market before my reservation period was up!

    I've even sent a special delivery letter to the owner of Wain homes (who lives in Jersey!) and no response.

    Their response now is that they will see me in court!
    • dodgy
    • By dodgy 20th May 09, 4:13 PM
    • 151 Posts
    • 49 Thanks
    dodgy
    The bank is correct. That's the problem with new builds, they're always grossly overpriced.
    Originally posted by Rollerball
    Well, I'm in the final stages of purchasing a new build and my valuation was the price I'm paying - so it can happen, although obviously and unfortunately not to the OP.
  • ILW
    Maybe I am being a bit thick here, but why put a deposit down before getting a valuation? Seems a bit ar5e about face to me.
  • Blueforever
    They call it a "reservation fee" rather than a deposit. This then seems to give them the right to walk away with it when you cannot get a bank to agree to a mortgage
    • withabix
    • By withabix 20th May 09, 4:40 PM
    • 8,959 Posts
    • 7,908 Thanks
    withabix
    I did use their own financial advisor - he recommended the Nationwide "as they understood the new build market"
    Originally posted by Blueforever
    He was spot on! They weren't lying to you.

    You are Part Exchanging though - probably getting 20-30% more for your house than current market value anyway.

    Smoke and mirrors and that's where your missing value has gone.

    The only people who win in part exchange deals are the builders.

    A non-part exchange buyer will probably get a 20% discount on the price you are paying.
    Last edited by withabix; 20-05-2009 at 4:42 PM.
    British Ex-pat in British Columbia!
    • terrierlady
    • By terrierlady 20th May 09, 5:07 PM
    • 1,721 Posts
    • 539 Thanks
    terrierlady
    whilst i agree you dont get full market value you get an agreed price on part exchange, you also stay in yours until the new ones ready, developers dont buy homes they sell them so if you beleive your being short changed on part exchange try the easy mover or market mover schemes where the builders pays your estate agents fees, you will soon see that the market is slow offers are far and few between so sometimes it pays to take a lower offer but at the end of the day we all value things differant and maybe its worth a call to your building society underwriter plus what the heck is the nominated FA doing about this down value?
    my bark is worse than my bite!!!!!!!!
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