How to negotiate a new build
Posted 20 January 2017 by Keith Osborne
If you want to negotiate a new build purchase, there are a lot of points to consider. Don't automatically assume that you're being offered a good deal; the developer may well have priced the property at more than it's worth.
In fact, you're more likely to get extras than a discount on the price of new homes, as developers don't want to annoy other buyers by selling an equivalent home for less than they paid for theirs.
So bear the following in mind:
- You'll be paying a premium for your new build home compared to similar re-sale properties. Look at the typical price for comparable properties, such as comparing price per square foot. This will show how much of a premium you'll be paying.
- Bear in mind that if you are part-exchanging, the builder will offer less than your house might fetch on the open market. However it may still be worth accepting a lower price for the convenience of not having to find a buyer yourself, not paying an estate agency fee and not being part of a chain.
- If you are offered ‘extras’, give some thought as to whether they are really worth having. For example, having your stamp duty paid would be worth more than extras that you won't actually use. If you are offered furnishings as part of the deal, you will probably have little choice over what you are given. Also, you may be offered what you think is £5,000 worth of incentives - but they're only worth £5,000 if you would have paid that for them anyway.
- Remember that if you do get extras thrown in, the developer will have built those into the price already, so you may not be getting the bargain you imagine. However, it can be convenient to have appliances included if you don't already have them.
- If the development is popular and likely to sell, there will be no incentive for the builder to offer you extras. However, if there is a lot of development going on in the area, and therefore competition for the builder, they may be more open to deals. Similarly, if there are plenty of properties on the market already, they will need to make their new builds more attractive to buyers who have a choice of established homes that may have larger rooms.
- If you want to improve your chances of getting a deal, choose your moment. Developers may be open to negotiation if the end of the financial year is approaching (typically June or December), if they only have a few properties remaining, or conversely if properties are proving hard to shift.
If you're looking at new builds from more than one company, use that to your advantage. Get them to compete for your business by informing them what incentives the other company is prepared to offer. To get your business, they may be willing to beat the offer of their competitors.