Wee Bit Of Advice - Negotations With Builders/new Development

[tinbin]

I have my own house sale agreed nearing completion. I went to a new development today to discuss prices for a new semi detached property that is just being started and wont be completed for another 6 months. The development itself is not selling houses at their current prices.

As the house wont be ready for another 6 months, lets just say we couldnt reach agreement on the valuation. The builder reckons it is worth £145-150k, my own personal view is that the market will be down on current values in the next 6mths so I am wont be booking anything at those prices.

Any advice ... should I put in a lesser offer? Play hard ball?

[BelfastVI]

Without knowing the site it is impossible to know if the price is fair or not. Some here will say offer 20% below asking price etc. Thats kind or irrelevant as the asking price may be more or less than 20% above what could be described as a fair price. If the development is not selling at the moment then one would be led to believe that something is wrong. That something would most likely be the price. May not be the price. May be the wrong product in the wrong place. There a lower price may still be a wrong buy.

My advice is to buy in a site that is selling. If a site is selling now it would indicate that they have perhaps the right location, design, quality and of course price. These things weren't so important a few years ago - they are now.

If they are selling now then they should always sell again.

However, on reading your post again I am encouraged by the fact that they have just started. Its therefore not standing stock. Its perhaps one to watch. £145k is perhaps below the NI average for a semi. Is the area what you consider above average. If its possible to assess under those terms.

Edited August 4, 2010 by BelfastVI

[catmandu]

I wouldn't go rushing in with offers. Tell them you're interested but not at that price and wait for them to make the move on prices. Let them know you'll be interested in any reductions in price which happen on the houses over the next 6 months.

[Ride_on]

There are plenty of empty houses around and record numbers for sale. If the recent history about buying developments has told us anything, it is do not agree to a price in the future. If the price drops you may not be able to get finance but will still be contracted to pay. If they are not selling then you do not need to worry, wait until completion and wait for the advertised price to drop. There is little point in making ridiculous offers, the advertised price presents what the seller thinks they 'need' or can get, they won't move much away from that, 10% typically.

I don't agree there is a 'fair price', it is simply the market. If developers have bought land at an over priced level they will simply have to minimise their loses, many I know are flush with cash from the boom.

Edited August 4, 2010 by Ride_on

[catmandu]

There are plenty of empty houses around and record numbers for sale. If the recent history about buying developments has told us anything, it is do not agree to a price in the future. If the price drops you may not be able to get finance but will still be contracted to pay. If they are not selling then you do not need to worry, wait until completion and wait for the advertised price to drop. There is little point in making ridiculous offers, the advertised price presents what the seller thinks they 'need' or can get, they won't move much away from that, 10% typically.

I don't agree there is a 'fair price', it is simply the market. If developers have bought land at an over priced level they will simply have to minimise their loses, many I know are flush with cash from the boom.

Yep - agree totally but would also add that many sellers don't need to sell because of low IR. Builders typically have shareholders and need to sell. They're not going to sell cheap if they have buyers happy to pay high prices - but when (if) some real fear kicks in they'll be the ones leading the charge. Those selling their houses on the second-hand market will see their prices becoming uncompetitive and be left behind.

That's the way I see it happening - as long as builders start to run out of cash due to low sales. It's not happened yet though.

[needle]

Without knowing the site it is impossible to know if the price is fair or not. Some here will say offer 20% below asking price etc. Thats kind or irrelevant as the asking price may be more or less than 20% above what could be described as a fair price. If the development is not selling at the moment then one would be led to believe that something is wrong. That something would most likely be the price. May not be the price. May be the wrong product in the wrong place. There a lower price may still be a wrong buy.

My advice is to buy in a site that is selling. If a site is selling now it would indicate that they have perhaps the right location, design, quality and of course price. These things weren't so important a few years ago - they are now.

If they are selling now then they should always sell again.

However, on reading your post again I am encouraged by the fact that they have just started. Its therefore not standing stock. Its perhaps one to watch. £145k is perhaps below the NI average for a semi. Is the area what you consider above average. If its possible to assess under those terms.

The best bit of advice I can give is to get someone else to negotiate.

Get your dad or brother or mate to go into the office, knowing your highest price.

This way the 'nerves' or excitement or any bullshiting or browbeating by the sales people wont work.

The sales person wont understand but your negotiator wont be swayed because they dont have emotions or money on the table; of course the sales-drone doesnt know this. He'll try every trick in his book but none of it will work.

He'll soon realise its down to price, and price alone. At that point he'll have to give way or lose a sale.

Seriously, give this a try its worked wonders for me.

Edited August 4, 2010 by needle

[Belfast Boy]

I went to a new development today to discuss prices for a new semi detached property....

The builder reckons it is worth £145-150k

That's a lot of money for a semi-detached. Have you looked into buying a site and building your own house? I here that people are open to offers on sites as planning permission runs out and banks are reluctant to lend for this kind of purchase. Though if you buy a site you will find that some banks will not lend to finance building.

[BelfastVI]

There are plenty of empty houses around and record numbers for sale. If the recent history about buying developments has told us anything, it is do not agree to a price in the future. If the price drops you may not be able to get finance but will still be contracted to pay. If they are not selling then you do not need to worry, wait until completion and wait for the advertised price to drop. There is little point in making ridiculous offers, the advertised price presents what the seller thinks they 'need' or can get, they won't move much away from that, 10% typically.

I don't agree there is a 'fair price', it is simply the market. If developers have bought land at an over priced level they will simply have to minimise their loses, many I know are flush with cash from the boom.

Fair price, true price, right price whatever you want to call it, you know what you mean. As a developer I know that I would not start to build (put money in the ground) unless I was fairly confident that I was going to get it back. If its in the wrong place, the wrong type or the wrong price there is simply no point in pouring more money into the ground.

It they had been sitting complete of half built for the last year or so then I would be concerned.

[BelfastVI]

That's a lot of money for a semi-detached. Have you looked into buying a site and building your own house? I here that people are open to offers on sites as planning permission runs out and banks are reluctant to lend for this kind of purchase. Though if you buy a site you will find that some banks will not lend to finance building.

Its a strange comment without knowing the location.

Its the average price for a Semi for NI.

And £20k below the average for Belfast (UUJ 2010 Q1).

[Belfast Boy]

Its a strange comment without knowing the location.

Its the average price for a Semi for NI.

And £20k below the average for Belfast (UUJ 2010 Q1).

Sorry Belfast VI, I was just thinking back to the good old days when the average NI house price was under £100,000. Now when was that... let me see... it was just Q1 2004 (Nationwide).

[Ride_on]

Fair price, true price, right price whatever you want to call it, you know what you mean. As a developer I know that I would not start to build (put money in the ground) unless I was fairly confident that I was going to get it back. If its in the wrong place, the wrong type or the wrong price there is simply no point in pouring more money into the ground.

It they had been sitting complete of half built for the last year or so then I would be concerned.

Of course you wouldn't your are a business, but buying/planning/approval/building all take their time and the market can change in that time, as has happened to many developers. When that happens your gamble has not paid off and you need to minimise losses, but of course many just hold out for the money they 'need'.

[BelfastVI]

This is happening down South in the ROI. Developers not willing to cut and having their loans taken in to NAMA.

Are they still building? No - the sites have been sitting.

[tinbin]

Just to give an update on this ... went back to the builders to see what could be done. Strange guy ... you know the type that wont look you in the eye.

Get this ... he rang the estate agents who are dealing with the site (Country Estates) as it was them who gave the valuation. They came up with this justification for £150k because the square footage of the property is approx 1200 and as a result they would market it like a detached house. ????

Conversation went a bit like this; OK??? is it a detached house I asked ... er ... No (Reply)

So you cant market it as a detached then ... er ... No but its like a detached (Reply)

This went on for a while and the Estate agent finished the exchange with 'We think we can get that money for them'

I thanked them for their time and told them to give me a ring when there prices are realisitic.

Not waiting on the phone call but I must admit as fustrating as the whole thing is it was interesting to see their surprise that I didnt throw myself on the floor and beg them for the house. I guess there are still silly ppl out there who will pay over the odds for bricks and motar unfortunately.

At least my house sold at a reasonable price ... in fact I done ok in my sale so think the best course of action would be to rent for a while and if prices continue to reduce then it should all work out in the end

[sophia]

Just rent for a while, you will kick yourself if you buy it now and in 6 months it is less. I sold, went into rented (with hubby and kids) and have now bought again for a fraction over the rateable value! It meant that we could look around at all the houses on the market and not feel rushed into finding one in a short period of time. It was worth the over 2 years wait, we know we will never want to move from here, as it has ticked all our boxes and more.

You have got your house sold, that is the hard bit over, you are on a journey, all the best!!!

[BelfastVI]

Just rent for a while, you will kick yourself if you buy it now and in 6 months it is less. I sold, went into rented (with hubby and kids) and have now bought again for a fraction over the rateable value! It meant that we could look around at all the houses on the market and not feel rushed into finding one in a short period of time. It was worth the over 2 years wait, we know we will never want to move from here, as it has ticked all our boxes and more.

You have got your house sold, that is the hard bit over, you are on a journey, all the best!!!

Sophia,

You say above you have bought. Yet in the same sentence you tell this man he will kick himself if he buys now.

[sophia]

Sophia,

You say above you have bought. Yet in the same sentence you tell this man he will kick himself if he buys now.

Yeah that is right - we bought our dream house for near rateable value, I would say to anyone if the house is at rateable or below and you can afford the mortgage then go for it;) I waited over 2 years from selling to buying so my circumstance is different, as I upgraded from a 3 bed semi to a detatched with 1/3 acre in prime location for the same money needing less than 30k mortgage.

My advice to FTB is to wait a year unless you get a real bargain.

[Reraise]

Sounds like a great buy Sophia, congrats.

As far as the buying process goes, my advice would be to make bids that you think are reasonable and can easily afford. You'll get a feel for the process and there's really no point in arguing with people. Just put the bid out there and see what happens. Also remember that the EA is employed to squeeze you for as much as possible so have a gameplan ready beforehand and stick to it.

DOI I bought earlier this year, 3 bed semi in good location -40% from peak. I sat it out for 2 years and bought this year because of personal circumstances. The market also looked like a stalemate and I didn't want to wait any longer. I do expect prices to fall further but I'm not looking at it as an investment.

[getdoon_weebobby]

forget about what the peak price was , that was just noise and this will be forgotten with time. do not pay more than RV is my advice. more and more property coming on around these levels so why would you consider anything above this level.....

Edited August 11, 2010 by getdoon_weebobby

[Reraise]

That only works on the premise that rateable value was an accurate reflection of property value at the time.

[tinbin]

Just rent for a while, you will kick yourself if you buy it now and in 6 months it is less. I sold, went into rented (with hubby and kids) and have now bought again for a fraction over the rateable value! It meant that we could look around at all the houses on the market and not feel rushed into finding one in a short period of time. It was worth the over 2 years wait, we know we will never want to move from here, as it has ticked all our boxes and more.

You have got your house sold, that is the hard bit over, you are on a journey, all the best!!!

I find your post very re-assuring ... its a big decision to sell up and rent (with wife & kids in my case), especially when we will have to pay out more a month in rent than we are currently paying on MTG costs! But we are making almost £50k profit on our house sale, if house values return to rateable values where I am then that will put us in a fantastic position to buy the type of property we would love to have