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The Masked Tulip

Asking Price 350K, Developers Purchase Price Supposedly 230K?

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Interesting anecdotal that I thought would be worth mentioning here.

House on sale near myself for 350K asking price for some time. House is being marketed by an EA at this price. The asking price is basically double what the house was last sold for circa 2005.

Turns out the sellers have already, allegedly, done a deal with a property developer to buy a new-build via part-exchange. I am told that the price the developer has agreed to pay for the house part-ex is 230K.

I am told the sellers are thinking about dropping asking price to circa 300K. Apparently this is a common thing when people part-exchange on new builds - they agree a price with the developer to buy their property, in this case 230K, but also continue to market the property trying to get a higher price, over 300K, than the developer has already agreed to pay.

If this is true then I think it is interesting that there is such a huge gap between the price the developer has allegedly agreed to pay and the price that the house is being marketed at by the EA.

Edited by The Masked Tulip

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Put your tin foil hat on and keep a watch out - they are after our baked bean stash.

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Interesting anecdotal that I thought would be worth mentioning here.

House on sale near myself for 350K asking price for some time. House is being marketed by an EA at this price. The asking price is basically double what the house was last sold for circa 2005.

Turns out the sellers have already, allegedly, done a deal with a property developer to buy a new-build via part-exchange. I am told that the price the developer has agreed to pay for the house part-ex is 230K.

I am told the sellers are thinking about dropping asking price to circa 300K. Apparently this is a common thing when people part-exchange on new builds - they agree a price with the developer to buy their property, in this case 230K, but also continue to market the property trying to get a higher price, over 300K, than the developer has already agreed to pay.

If this is true then I think it is interesting that there is such a huge gap between the price the developer has allegedly agreed to pay and the price that the house is being marketed at by the EA.

Normally the developer gives about 95% of the value on the old house and this figure is arrived at by the average of 3 independent local agents.

To do a "PX" deal you need to be trading up by 30% . The developer then sells the house for a quick price , in most cases quite a bit less than they bought it for , this loss is made up from loading the cost of the new home. Most developers give incentives to buyers , deposit paid , extras, stamp duty ect. In the case of a "PX" no other incentive will be granted , so the developer off sets some of the cost of the "PX" by giving no other incentives.

In the kind of market we now have with surveyors being very tight on valuations of new builds it is much harder to load the price of the new home to take account of the loss on the "PX" . Hence the very low offer on the old home that you have shown . In days gone by the developer would have been able to offer them a much better price.

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House on sale near myself for 350K asking price for some time.

Naughty Tulip. You've been listening to Talk Sport haven't you? I think their Radio Station Licence requires them to misuse myself at least once an hour.

Edited by Guy M

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Interesting anecdotal that I thought would be worth mentioning here.

House on sale near myself for 350K asking price for some time. House is being marketed by an EA at this price. The asking price is basically double what the house was last sold for circa 2005.

Turns out the sellers have already, allegedly, done a deal with a property developer to buy a new-build via part-exchange. I am told that the price the developer has agreed to pay for the house part-ex is 230K.

I am told the sellers are thinking about dropping asking price to circa 300K. Apparently this is a common thing when people part-exchange on new builds - they agree a price with the developer to buy their property, in this case 230K, but also continue to market the property trying to get a higher price, over 300K, than the developer has already agreed to pay.

If this is true then I think it is interesting that there is such a huge gap between the price the developer has allegedly agreed to pay and the price that the house is being marketed at by the EA.

So what you've found is the difference between the asking and possible selling price. In this case, they asked for £350K and have agreed to accept £230k - so that's a 35% drop! Its no surprise they buyers are fishing for a better offer!

Lets hope they lose both and the developer gets pissed off and drops his price further!!!

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Naughty Tulip. You've been listening to Talk Sport haven't you? I think their Radio Station Licence requires them to misuse myself at least once an hour.

Don't tempt him with "misuse myself" talk ......

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c

So what you've found is the difference between the asking and possible selling price. In this case, they asked for £350K and have agreed to accept £230k - so that's a 35% drop! Its no surprise they buyers are fishing for a better offer!

Lets hope they lose both and the developer gets pissed off and drops his price further!!!

350K coincidentally is the asking price of the new builds by the developer.

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Hence the very low offer on the old home that you have shown . In days gone by the developer would have been able to offer them a much better price.

The old home is only about 5 or 6 years old itself.

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350K coincidentally is the asking price of the new builds by the developer.

LOL! The sellers should offer as straight swap! They're clearly both trying to seek the greater fool if not from each other then the wider market.

Edited by Earthling10

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The old home is only about 5 or 6 years old itself.

Age of the old home does not matter , they are taking it in "PX" in order to sell the new home , they do not want the homes the new or the old they make their money selling them . They take the old home and sell it like they do the new one.

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Not that many houses seem to come up part ex, only one I saw was this...

http://www.rightmove.co.uk/house-value.html?searchLocation=NN8+4UR&sellersPriceGuide=Start+Search&radius=0.0&displayPropertyType=detachedshouses&bedrooms=4

26 Feb 2010 31 Reynolds Close, Wellingborough, Northamptonshire NN8 4UR Detached £145,000

22 Dec 2009 31 Reynolds Close, Wellingborough, Northamptonshire NN8 4UR Detached £160,000

So, develops (bovis, IIRC) took a £15k haircut on this one. Most they seem to want to offload pretty quickly.

FWIW the same house type sold for £200k in 2007, £69k in 1995, id wouldnt want to pay more than around £105k.

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Not that many houses seem to come up part ex, only one I saw was this...

http://www.rightmove.co.uk/house-value.html?searchLocation=NN8+4UR&sellersPriceGuide=Start+Search&radius=0.0&displayPropertyType=detachedshouses&bedrooms=4

26 Feb 2010 31 Reynolds Close, Wellingborough, Northamptonshire NN8 4UR Detached £145,000

22 Dec 2009 31 Reynolds Close, Wellingborough, Northamptonshire NN8 4UR Detached £160,000

So, develops (bovis, IIRC) took a £15k haircut on this one. Most they seem to want to offload pretty quickly.

FWIW the same house type sold for £200k in 2007, £69k in 1995, id wouldnt want to pay more than around £105k.

I think my example of part-ex shows just how much these part-ex schemes can queer house prices and what a huge difference there is between a seller's asking price and what a property firm is prepared to pay.

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  • 285 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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