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Boydie

Advice Needed - Mid Negotiation On New Build!

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Hi All

I have spent the last few days reading loads of (very useful and informative) threads as I am currently in negotiations with Berkeley Homes on a new 5 Bedroom Townhouse

The new house is up for £329,999 - it is an end of terrace 5 bed townhouse, the other end is the show home so is currently the only one available

We initially asked about a part exchange option but they said they didn't offer this so we put our house on the market

However, on a second viewing we were offered the potential of a part ex if we were willing to be in by Christmas - I took this as a sign of a desire to meet targets before the end of the year and sensed a bargain...

The offer on our house was 90% of "market value" - around £180k for our 3 bed semi, we are currently on the market at £210k but not much interest yet, although we have only been on for a few weeks and have some viewings next week

We made an initial offer of £273k, which was turned down

We then offered £278k, which was turned down

I asked what figure they were looking for to see how close we were but they did not want to give me this figure and had to call me back

When they (eventually) called back (their manager that makes all the decisions always seems to be in meetings and hard to get hold of!) I was told £278k was "way off" but the sales rep hinted the offer would need to be at least £285k - although when I asked if this would be accepted I was told that she would need to check with the director

I said they were not being fair by not giving me "their figure" to work with

I got a call today from another sales rep in the office saying that they had discussed with the director and he said he was looking for £300k+, but she went on to say that she felt somewhere over £290k would be considered (good cop, bad cop?)

What would your advice be on our next move?

We have now got additional funds to increase our £278k bid but what to?

I am ready to walk away but we obviously like the house or we wouldn't have made the offer in the first place - I want to get "a deal" to offset some of our loss on the part ex (although I do place some value on the "hassle free" nature of this arrangement!)

Do we still stick to low offers and come up gradually? - although they do not seem to be "playing the game", which to be honest is actually starting to annoy me - especially as we must be quite attractive buyers ready to move straight away

Could it be that they do not really want the part exchange and are not coming down because of this? - if not then why not just say so!

Are we expecting too much of a drop on a £330k house? - they have been this price on the price list since before they were built.

They are now built and ready to move into so surely their value would have dropped?

Any thoughts or advice would be very welcome - including thoughts on "up sizing" in the current market

We intend to stay in this house for a long time (20+ years) but who knows what the future holds...

Thanks

Boydie

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They probably don't want the part ex, or if they do take it, will need to pull your pants down over the price on the new build. Your in a position of weakness.

If you was a FTB or paying cash out right, you would most likely get them down on the price.

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If you are prepared to accept 180k from the builder for yours why are you still marketing at 210?

Call your agent tell him you are prepared to take 180 and see if he has any buyers that will bite at that price. The builder will be much more likely to talk turkey if they don't have to worry about reselling your old home and know that you are actually in a proceedable position.

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.... thoughts on "up sizing" in the current market

....

House values will halve during the next ten years. This will either be due to inflation as more and more people strike and fight back against the cuts and wages grow, much to the irritation of business, or due to falling nominal values as fewer and fewer people are in a position to buy due to increasing shortage of credit as the crisis deepens. Of course a combination of those two is also possible.

So the simple question to ask yourself is which do you want most - the new place or the 100 odd grand to buy it? Its not an "investment" or a "pension" its a cost - just like buying a new car. If you can afford it and want it and think its the best use of the money then buy it - its your money and your life and not for me or anyone else to criticise. If its more than you can really afford or will leave you short of money for other things (especially when the interest rate goes up) then you might be well advised to hold out for a better deal even if you lose this one.

I have bought new build in the past (London) and seen the estate turn from shiny new and pleasant green lawns to tatty and run down, rented out noisy sh1t hole over time. You might not actually want to live there in 20 years time.

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Thanks for the replies guys

If you are prepared to accept 180k from the builder for yours why are you still marketing at 210?

PbroAgent - I have found your comments in other threads particularly useful so really appreciate your thoughts

Being completely new to this game (we had a very straight forward first purchase 12 years ago) I thought the part exchange option would be very straight forward so my thought was even though we were offered £20k less on ours we could re-coup part of this on the new house with a "mega deal" prior to Christmas!

I do not think we would accept a straight offer of £180 - although would obviously talk it rhough with our EA

I wrongly thought the part ex would actually help us get a better deal - because the developer will actually make a profit when they sell ours - although I now recognise that they do not want the extra hassle, which is a shame because I refuse to "lose out" on our property and still not get a good deal on their one

non frog - thanks for your thoughts

We are in a lucky position where we will be able to put the equity we have built up on our existing property into the new house (about £80k) so we do have a buffer against "negative equity" should the market take a nose dive, which is all relative and I would definitely welcome a drop to bring property more in line with salaries!

The drop would have affected our existing house so I am not overly concerned as we are not looking at the next house as a "quick win" investment but we do need more space very soon

I have bought new build in the past (London) and seen the estate turn from shiny new and pleasant green lawns to tatty and run down, rented out noisy sh1t hole over time. You might not actually want to live there in 20 years time.

This is something I hadn't considered so thanks for this. In this situation we have a Berkeley development nearby that is 10 years old and still "pretty". There are also plenty of phases left so I am sure they will keep it in tip top condition when tryin to sell the new ones so I think we have a good 10-15 years at least

I will see if they contact me today and then make my next move to see what happens - any advice on what this should be?

Do I up my offer a bit

or

Do I up my offer a lot and then ask them to pay the stamp duty - would this be better for them as the land registry would show we paid a higher price so it would not compromise them on properties in the future? - do you think they would consider this an advantage or am I "over thinking" it and it is the net price they will look at?

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Lots of questons where to start? (It's also good to know I'm appreciated :rolleyes: )

Firstly all of the new home builders I have ever dealt with have had a December year end, meaning you are correct in thinking that there ought to be some mega deals around right now. I suppose this is always tempered with the fact that there is only one of the property type you want which means to a certain extent there the ball is more in their court. When asking for valuations for p/xs builders ask for three figures, an asking price based on a 4-6 weeks sale period, an achievable sale price based on the first figure and an "at risk" or forced sale figure (i.e. a price which will have people literally queing at the door to buy it.) This means that the figures they use are VERY conservative as the average sale time is more like 4-6 months. The fact that you have been on the market for a few weeks, without offers tells me that your price is higher than a builder will pay and thus the £180k figure sounds like market value from their point of view.

When pricing a new house builders traditionally work in thirds - a third of the house price for the land, a third for the build and a third for the profit. This may have been skewed as they may have overpaid for the land if they bought it at the peak of the market, but there is still a good chance that there is some haggling space there. Bottom line deals generally only go to cash buyers as there is little risk, but try to haggle for upgraded fixtures and fittings, garden & carpets, deposits & fees paid as they may be available to the builder at cost price and will be worth more in value to you than it will cost them to source.

Of course selling through an agent will cost more than selling direct to a builder, you will have to pay the fees. £190,000 may therefore be the price to try to achieve £185k and cover the extra cost of the fees - thence to go and haggle again with the builder.

In terms of condition of the estate in 20 years - around Peterborough new areas only seem to go to pot where there is a large amount of affordable housing or the properties attract a large number of BTLers. If the property and the surroundings are priced to dissuade those buyers I wouldn't worry too much. Remember though that like with a car the moment you get the keys the house will be worth 10% less than you paid. This was never an issue during rising house prices but has really come home to roost in the newer developments of Peterborough where people have taken some big hits on equity levels.

The answer to the final question is up for debate. Either take the P/X deal and go up a bit (but they usually like to get full asking if there is a P/X involved), or get sold first and try again then (I'm surprised they're even contemplating an offer if you haven't sold)

Good Luck. Let us know how you get on.

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Thanks PbroAgent - you are even more appreciated now! :)

That is exactly the kind of "insider knowledge" I was after

I will take what you have said on board and consider my next step

I will of course report back...

Thanks again

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  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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