We speak to thousands of home buyers every year who are looking to buy a new build home and aren’t sure how to negotiate when buying a new build home.
The perception of many is that you cannot negotiate when buying new. This is not the case, often the developer is more open to negotiation than a normal home owner.
To show what we mean we analysed the sale prices of a fairly typical new build development in Nottingham built by Bellway Homes.
Only 10 of the 26 properties sold for the same price, showing that most buyers paid different amounts for essentially the same house.
We can also see that properties were selling well below asking price, for example one had a guide price of 225,000 and sold for £200,995 and another was advertised at £399,995 and sold for £379,995.
This same picture will be found in every new housing development in the country. Just like the person sitting next to you on an aeroplane, you and your neighbour are unlikely to have paid the same price.
Our 10 Point Guide is designed to help you create a negotiating strategy to help you secure your new dream home at the best price possible.
How to negotiate when buying a new build home…
1)First rule of negotiating the purchase of a new build……
Is that you CAN negotiate, the sale price is not fixed and you shouldn’t be made to feel uncomfortable for putting in an offer.
2) Before you start negotiating…
Before you make an offer, make sure that you are in the best position possible. The builder is looking for certain, quick buyers. If you can offer them a fast and guaranteed date you are more likely to get a good discount.
- If you have a property to sell fast, it should at least be under offer and have to hand information about likely completion dates and how progressed the sale is.
- If you require mortgage finance you should have proof of an agreement in principle and deposit so the builder knows you are financially proceedable.
- If you are buying with cash, you are in the most favourable position but it can help to have proof of funds ready.
- A good sales rep will ask but if they don’t make sure they are aware how good your position is when they go away to discuss your offer with their manager.
3) Do your research before you negotiate….
Obviously the ability to negotiate a price will in large part come down to demand and supply. So before you start make sure you have done your research:
- How long has the development been for sale?
- How many homes have been sold?
- Are other builders offering similar properties in the area?
- If there is a lot of competition from another builder, the development has been for sale for a long time and/or very few homes have sold there should be a great opportunity to negotiate.
- TIP-Even if you have a favoured development, enquire with the another builder to see what deal you can get and test out your negotiating skills.
4) Once you visit the site you must continue your research.
- Does the development seem busy or did it feel like you were the first person through the door that day?
- Ask the sales rep how much interest they’ve had and how many have sold?
- Even if you have your heart set on a property, don’t make the sales rep aware of this.
- Make out you are looking at other properties and developments even if you are not.
- Don’t offer immediately, go away and consider things and decide your negotiating strategy.
5) You can try and obtain additional information….
from either the sale rep or online which could help in your negotiation.
- Is the builder coming up to year end? If the builder has targets to hit or shareholders to keep happy they are more likely to offer favourable discounts for purchases that occur before year end. You can usually find out the date of the company year-end via companies house.
- Are you buying off-plan? Generally builders will offer the best discounts on off-plan purchases as they try and guarantee sales and generate income to fund the actual build.
- Often you will get good deals on the last plot or two on a development. The builder is spending a lot of time and money maintaining the sales office and staff and so will offer discounts on the last units so they can close and move onto the next site.
6) Negotiate in incentives…
Incentives (carpets, curtains), cash back (stamp duty, solicitors fees) and final specification (higher spec kitchen or white goods) are sometimes easier to negotiate than the final price as the builder is trying to maintain a standardised sale price.
If your negotiation based on price doesn’t go to plan, see if they will pay stamp duty, removal costs or throw in carpets or higher spec kitchen.
7) If your offer is below asking price the worst they can say is no.
The negotiation doesn’t end there you can always improve your offer. Remember this is a purely commercial situation for the builder so they will entertain your subsequent offer.
In comparison when buying from a member of the public you can cause a rift by making a cheeky offer which means any subsequent offer isn’t taken seriously, so it many ways it is easier to negotiate with a builder.
8) What if you are buying a shared ownership or help to buy home?
Many sales rep’s will say they won’t offer discounts/incentives but this doesn’t mean they can’t. They are feeding off the perception that you can’t/shouldn’t negotiate.
It all comes down to supply and demand, if there is a lot of proceedable interest in a property you are unlikely to get a discount. However if they are struggling to find a buyer then you should be a able to a get a discount whether it is on a help to buy scheme or not.
9) Stick to your guns.
Negotiations can take days, don’t panic and immediately increase. Trust in your research. If demand is poor you stand a good chance of getting a discount.
You quickly get caught up in the large sums of money. Getting £1,000 off a £300,000 purchase may seem negligible but how long does it take you to save £1,000? Wouldn’t that money be better spent on a new holiday?
10) Ensuring you have made the right decision
Before you buy your new build home, you have to be certain that you are making the right choice of development. here a few things need you need to consider to ensure you are making the right decision.
Do your research, have confidence and GOOD LUCK!