Putting a 10% off asking price offer on a new build

[Alexatancu]

Hi everyone,

We found a house we liked however the location is not the most convenient for me and my partner.
We however decided that the house is really nice and have called to ask if any offers have been put on the house. We were told that no offers have been put forward and the house has been on the market since end of November. So as advised by our broker we started at 10% off the asking price planning to increase to 7.5% and 5% as our last offer.

The agent called and seemed very offended by it and acting as if there is no such thing as counter-offering and second and third offers. She said that the offer is rejected and they want an offer closer to asking price to be accepted. But obviously you always start with your first offer being the lowest?

Should I proceed with making the 7.5% offer or the 5% offer now as the last offer? And should I justify my offer? We also found a new build house which is slightly larger, in a better location and priced lower than this one that we are looking it's just that it's not ready to move into like this one so should I tell them the reasons for our offer?

If there are no other buyers around I would put in your offer and see what happens. Buyers are a bit thin on the ground these days and the agent would be daft to dismiss you without a bit of negotiation.

She instantly dismissed the offer and didn't even mention that she'll send it to the developer for review. It was a very weird response. Especially since we were expecting them to counter offer anyway

This is a new build yes?
I would put your 10% off offer in an email to the agency and ask her to pass it on to the developers. I don't think you necessarily need to state your reasons. What is the maximum price you are prepared to say. Do bear in mind that new builds always lose value immediately and that we are in a falling market before you offer and proceed.

Yes it is. I have emailed it and she was very offended by it asking us if we're aware of the asking price and saying they want close to asking and that they offer incentives which we can discuss. She instantly refused out offer and didn't even pass it to the developers. The maximum I'm willing to pay is 5% lower than asking price

She would say that. It's her job to use sales tactics to get the best offer for her clients. She is obviously not personally offended because it is not her house.
They will much prefer 'incentives' because that way they can keep their sale prices up which looks better in their stats even if they are paying in a different way.

I guess it depends if you are prepared to play hard ball. Realistically, the market is falling and continuing to fall. All the main developers have taken a bit hit, seen interest and sales fall hugely, share prices down, etc. They haven't had any other offers in 3 months. If you want to stick at your 10% offer, then you can email her back putting this politely to her. If you are happy to offer 5% under and think it is worth this (this is doubtful on a new build), offer that and say that this is your final offer.

I always thought you didn't really get money off the purchase price for a new build. But you could get white goods/carpet/cash back/stamp duty paid sort of deals.

Yes, I do understand that what rubbed me the wrong way was that she did not pass it to the developer, and should have been more polite about it. Would you say I should offer 5% as my second and last offer or put the second offer slightly higher than the first one, with the 5% being the third and last one? My other option other than 5% being the best I could offer is to offer them 3% lower but ask for a deposit contribution to cover the 2% since they offer incentives

Developers will offer anything other than a price reduction, eg(stamp duty paid, fully furnished, their first born child). If they give it to you 10% cheaper, everyone else will want the same offer. I would be wary about paying full price. Prices are falling, inflation might become sticky with wage rises happening. I have no doubt interest rates will go up again on 23rd March. So not the right time to over stretch yourself.

I agree with this.
I can't advise on what offer you put in but I would caution you about overpaying in this environment as per the above post.
You can put whatever offer you are personally happy with in an email. They can pretend to get offended/ be rude as a marketing tactic or whatever. They may come back to you in another month if they are still not selling the house(s).

You should be able to negotiate on the price as well depending on the stage of the build e.g if early on or if they are at their last few plots. In this case they have a few plots left and the property has been on the market for 3 months with no offers put forward

Why bother, if the other house you've found is much better? Given the differences between the two, I'd rather have some things to change than have my house smaller, less conveniently placed and more expensive. You can't use the differences between these two to justify your lower offer for the first, it's not relevant really.

Why can't you deal with the developer directly? New build builders tend to prefer to offer incentives such as stamp duty rather than lower offers so not to impact the value of other houses on the development, it all works out the same if you can negotiate the reduction you want in incentives.

That is very true but this other house will only complete in June and the show home we re going to see isn't the same as what this home will look like. So there is that bit of uncertainty and if things could get delayed etc, compared to this one which is ready to move into (it also has solar panels which is a plus) but yes we don't want to go higher than 5% off the asking price as we don't think it's worth it

Because we would need a deposit contribution of £24,000 to get to the asking price. Do you think they'd be more likely to agree to that?

I believe she has to put your offer to the developer if you ask her to. I would ring back and say that you have slept on it and you are requesting that she puts your offer to the vendor. Say very little else. If you say anything you could remind her that it's been on the market for a while and you are a serious buyer with a real offer. I would get some output and feedback on your offer from the estate agents/vendor before I jumped to a higher offer and for now I would be saying 'that's the offer I am prepared to make'

Because the estate agency is in charge of offers/reservations

I used to work in sales for new build developer at quite a big company, we never accepted offers and the only time a property got reduced was if it was down valued on 2 or more surveys. They may look at incentives if they are keen to sell it quickly. They won't change the price as they will use properties of the same type as evidence for surveys, it means if they reduce one they are saying the next house type of that style isn't worth the money.

We bought a new build that was up and ready 3 years ago, we didn’t get a reduction in price but got 18k worth of incentives including our stamp duty and legal fees paid, I’d ask for the deposit contribution

@Alexatancu they may well do, basically what we did is worked out we needed X amount and threw it back to them to ask how they could do it, it's all a farce, it's just a bottom line for them whatever it's called, we couldn't do deposit contribution because we were only putting down a 5% deposit, you might be able to get 5% if you're doing the other 5%. We got stamp duty (£9000), cash towards wardrobes (£3000) and then upgraded kitchen and flooring without.

Many people won’t deal with FTB for this reason.

If the property isn’t open to offers then she has probably been told in advance not to waste anyone’s time passing on a below price offer. Very often new builds go for their market price but you negotiate the money off through other means.

You need to take the asking price and deduct everything you need to pay (e.g deposit, stamp duty, flooring, turfing, wardrobes, etc). Itemise and ask for that to be included.

If you want to negotiate on price, look for a house that isn't a new build. If it's not worth the asking price before it's sold, it certainly won't be once you move in so look elsewhere. Otherwise do what everybody else does and make an offer close to asking price with the huge list of extras you want included for that price!

Not sure your broker has done a lot of work with new build developers.

Newbuilds don't ALWAYS lose value immediately... ours has only gone up since we bought it. But I do accept we've been fortunate.

Ours has gone up substantially, we ported our mortgage so had to re-fix just 18 months later and it was worth 20% more. The new builds in my area are really desirable; beautifully landscaped estate with excellent schools and medical facilities in the area. I don't think it's just luck either, perhaps it's different on flats or London.

They always lose value as soon as you move in as the become a second hand property. If the market rises extremely rapidly as in 2020-early 2022 they can rise in value subsequently. Of course, the market is now going down...

@rainingsnoring it's not a car, houses do not depreciate because they're brand new. What you're saying is completely moot though because the value of a house one month later is pointless, very few people are staying in a house for less than a year, anyone is at risk of losing equity moving that quickly, especially in a market like this. If you look at a new build estate the houses go up in price regularly, ours was in a more buoyant market but houses were literally going up thousands every few weeks between new ones coming up for reservation. By the time our estate was finished the last house in our style sold for £50,000 more than we bought ours, we are talking a few months apart!