How to negotiate the price when buying a new build - Is it possible?
Buying a new build and want to know if you can negotiate the price? We have the answers you need.
When buying a new build home, there’s always lots to think about. Like, what area do you want to live in? What developments are there in the chosen area? Do you want to live on a development or in a standalone new build?
AND don’t forget, you’ve also got to think about the price.
New build homes are always towards the top end of pricing for houses of their size, so wouldn’t it be great if you could get some tips on how to negotiate the price when buying a new build?
Well, it’s your lucky day! We’ve compiled a list of tips, tricks and questions to ask when buying a new build to help you negotiate a better price…
Is buying a new build a good investment?
When buying a new build, it’s important to think about if they’re a good investment. After all, investing in property is the biggest investment many of us will face in our lives.
Everyone will have a different opinion, so you have to decide what’s right for you. However, if you’re asking us – we say YES! New builds can be seen as a ‘safe’ option, as they come with a 10-year NHBC warranty, covering any structural worries.
Also, the running costs of a new build are significantly lower than an older property, as they’re made using the latest energy-efficient technology. The average spend on heat and power in a new build is £443.40 per year, which is less than half the £1,072 a typical older property costs (Independent).
Alongside the financial gain, you’ll also be the first person to live in the property and so will have a completely blank canvas to decorate it how you choose.
If you want to read more to decide if buying a new build is a good investment for you, have a read of this.
What should I look for when buying a new build?
What is the area like?
This will help you get information on factors such as crime rate, schools, hospitals, doctors and phone and broadband signals.
If you’re buying a new build on a development, you could ask about how many of the other properties have been bought and who they’ve been bought by, to help you get a feel for what the vibe will be like.
Are new build homes freehold?
In case you’re unsure, being a freeholder of a property means you own it outright, including the land your property is built on.
This means you’re responsible for the costs associated with maintaining the property and land.
Something to keep in mind when buying a new build is, as of 2019, it was announced all new builds will be sold as freehold properties.
What upgrades add value to a new home?
For example, you can get offered a kitchen or bathroom upgrade to make them the highest quality.
These upgrades will add value to your home, but they come at a cost, so it's worth checking upfront the pricing of upgrades.
How long can you reserve a new build for?
When buying a new build home, once you’ve decided on the property you want to buy; you’ll be asked to fill out a reservation form.
At this point you will be asked to pay a reservation fee, normally between £500-£1000, and given details on how long the deadline is for contract exchange.
If you don’t meet this deadline, you will lose your reservation fee and therefore your reservation of the property.
The deadline for contract exchange is normally 28 days, but it’s worth double-checking with the developer as the deadline may be different.
If on development, what is the management fee?
A management fee is like a ‘service charge’, paid by each member on the development to ensure upkeep.
Some developments increase this fee over time, with some having no ‘cap’ on how high the fee can go, so this is something that’s definitely worth checking when buying a new build.
Questions to ask when buying a new build house
So, you’re buying a new build, but you don’t want to pay the full asking price.
Well, you’re going to need to know the right questions to ask. Lucky for you, we’ve got together a little list of questions which will help you get to know how to negotiate the new build price.
Before you agree to buy:
These questions are better asked before agreeing to buy a new build, in order to negotiate a better price.
I've looked at other developments and noticed you have restrictive covenants on your new builds, but the other developments don't. Why is that?
Unsure what restrictive covenants are? It’s okay, they’re actually quite straightforward.
Restrictive covenants are conditions, written into a property’s deeds by a seller, to determine what the homeowner can and can’t do with their house and land.
For example, they may prevent you from being able to extend your house. This is common amongst new build developments as the developer often wants to maintain the uniform look across the houses.
If there are other developments close by, even if you’re not interested in buying a new build there, go and have a look.
If they don’t have restrictive covenants, this is something you could use as a ‘bargaining card’ to negotiate your new build house price.
For example, you could state that other nearby developments don’t have restrictive covenants on the properties and although the developer may not remove the restrictions, they will often move on the asking price of the new build so they don’t lose you as a buyer.
On development X, a house of the same size costs £ but on your site it costs ££. Why are you more expensive?
Once again, if there’s a nearby development it’s always good to look around, even if you’re not interested in buying.
Look to see the price of a new build, the same or similar size to the one you want, on development X and use this to negotiate with the developer on your desired site.
If on development X, you can get a house of the same square foot for cheaper, raise this with the developer of your desired site and they will likely drop the price, and maybe even match the price of the other site.
This is one of the last plots on the development, am I able to get a lower price?
If, when buying a new build, your desired plot is one of the last ones left on the site then you can use this to your advantage.
By the time there are a few developments left, the developer will be keen to move on from the site and so will be open to negotiating and selling to you for a lower price, in order to get a sale.
Another thing to consider when buying a new build is the timing of your negotiations.
For example, if you’re purchasing at the end of the year, developers will be keen to meet sales targets and, if they’re below their target, may be willing to reduce the asking price by up to 30%.
After you agree to buy:
These questions are ones you can use after you agree to buy. They may not get you money off the initial asking price, BUT they’re likely to get you some money back in compensation or some ‘freebies’.
Can I arrange a new build snagging survey before completion?
We’re going to cover more on this later but to give you a quick insight; a new build snagging survey is designed to check for problems with a new build home.
The best time to get a snagging survey is after building work is finished but before completion date. This survey will give you a ‘new build snagging list’ that you can take to your developer, who will fix the issues free of charge.
If you’re wanting to know more about snagging surveys, and potential problems with them, direct your eyes down to the next section and all will be revealed…
You said my house would be built in this amount of time, but it's not finished. What are you going to do?
When buying a new build off plan, you will be given a timescale for the building of your house. However, developers often run behind.
Although this is not ideal, you can use it to get some compensation. If you raise to your developer how long the agreed timescale was and point out they haven’t finished it in the agreed time, they will often be willing to give you money off.
Some developers may even throw in extras, such as flooring or furnishings, free of charge to make up for the delays.
When we agreed to buy the house, you said there was no further development planned, yet it seems that's not the case. What are you going to do about it?
If you’re buying a new build on the edge of the development, you’re probably doing this as it’s more private and there will be less houses around you.
If this is the case, it’s best to check when agreeing to buy if there’s any plans for more development. If the developer tells you there aren’t any future plans for developing but later, after you’ve moved in, building begins next to you, this is something you can bring up to the developer and they will likely offer you a sum of money in compensation, in order to try keep you happy.
New build snagging survey
We told you we’d cover these in more detail, so here we are…
As we said earlier, a new build snagging survey is designed to check for problems in a new build. The survey will create a ‘new build snagging list’ detailing both minor and major issues. For example, the list could range from a door not shutting properly to major structural issues.
The most common issues picked up by a new build snagging survey are tiling, skirting boards, plastering and external brickwork.
The survey often costs between £300 and £600, which although sounds like a big cost, is essential when you’re investing thousands into a house to ensure everything is done right and won’t cost you further down the line.
As we said earlier, the best time for you to have a new build snagging survey is after building work has finished and before completion.
This way the developer has time to fix any of the ‘snags’ before you move in. However, some developers don’t want the surveys done before completion and so will deny you access.
If this happens, your conveyancer may be able to intervene and arrange access for the survey.
Or you can arrange the survey for as soon as you move in.
This way it’s likely the developer will still be on site and so will be easier to get hold of them to fix the issues, free of charge.
You can technically have a new build snagging survey at any time within the first two years of moving into the property.
During this period of time, it’s the developer’s responsibility to fix the issues. A snagging survey ensures the issues are fixed free of charge. If major issues are found, this will give you some negotiating power to get money back as compensation.
No matter how good your new build snagging survey is, some things won’t become apparent until you move into the property.
Because of this, it’s important to keep a ‘snagging list’ from the day you move in, detailing even the smallest niggles. You can then take this to your developer within the first two years for them to fix.
If, however, after the first two years of living in the property you notice a major issue, you can claim under the NHBC warranty.
This warranty should come with all new build homes, covering building defects, and lasts for 10 years. When buying a new build, it will be worth checking that the NHBC warranty is included in your purchase.
If you still have more questions on new build snagging surveys, this may be able to help.
New build part exchange scheme
When it comes to buying a new build, if you haven’t already sold your current house, the developer will give you the option of a new build part exchange scheme. Never heard of it? No problem! Let us tell you all about it...
A new build part exchange scheme is where you trade the value of your house against the property you’re buying. Effectively, you sell your house to the developer who will discount the new build by the value of your current house. This will mean you’re not stuck in a chain and know your house sale shouldn’t fall through, as you’re selling it to the developer.
Once you’ve found a new build plot you’d like to buy and have discussed a part exchange scheme with your developer, they will arrange two individual valuations of your house and then make you an offer based on these valuations.
This may sound like an ideal route to take when buying a new build home but it’s worth keeping in mind it’s not as easy as it seems…
Firstly, when your property is valued, it’s often you’re given a valuation a fair bit below market value. This is because the estate agents valuing your house have been asked to give you a price based on selling price, rather than asking price. If you have a price in mind which you were hoping to sell your house for, you’re going to be disappointed with the part exchange house value you’re given.
Another thing to consider is not all homes are suitable for a new build part exchange scheme. Your property may not be in the correct part of the country for the investor’s company. Or your property is a flat with a short leasehold and so reduces its ability to be sold on.
Your current property must also be worth at least 65% of the value of your new build. Or if your current property has a higher value than your new build then you will not be able to take part in a new build part exchange scheme.
Also, part exchange is still subject to a survey being completed on your current home and if there’s structural defects or issues that need repairing, the developer will withdraw their offer and not allow you to take part in a new build part exchange scheme.
This is an awful lot of hassle! If only there was a way to have a guaranteed cash sale, allowing you to sell your house fast, without a new build part exchange scheme…
Do you want the good news?
We’re able to help!
We will buy your house for cash and cover all the costs associated with selling your house. Yes, that’s right – no need to pay those legal fees, we’ve got them covered! We have over 50 years combined experience in property, meaning we’re someone you can trust. Don’t just take our word for it, check out our reviews!
Unlike a new build part exchange scheme, we buy any house in any condition, so you don’t need to worry about us withdrawing our offer once we see the list of house repairs!
We know how it feels when sales fall through, while the deadline for your new build gets ever closer, and you start to think “how long does it take to sell a house?!” Well, on the open market the average time it takes to sell a house is 4.2 months (The Advisory), but with us you can feel comfortable in the knowledge our average time from offer to completion is 2-3 weeks.
Yes, that means you can sell your house fast, with no worry of the sale falling through, and walk away with cash for in your bank AND a new build home in as little as two weeks!
Sounds like something you’re interested in? Why not give us a call or fill in our online form today and receive a no-obligation cash offer and have you on your way to sell your house fast and purchase your new build, at your negotiated price.