Will I get a £600k house for £500k

[caravantulips]

Suddenly find myself looking for a house for the first time. (Long story but I’ve never looked or bought before). There’s a new build advertised as £595 guide price. Am I totally naive in thinking that the price could be brought down if they do don’t all the finishing hi spec bits. Plus slow market at the moment (I have no idea - is it slow? Just thought might be with the news etc.). £500k is my absolute max budget. Am I wasting time even thinking it’s an option?

No, they often won’t budge on price, as those finishing high spec things are extra anyway. They sometimes give things like 5% deposit, or free flooring and upgrades, but they don’t budge on price unless end of build and desperate to sell. They’d never reduce by 100k.

I have seen lots of reductions on new builds in several areas but definitely not 100k in one go. How long has the house/houses been up for sale?

Unlikely you’d get a £100k reduction, that’s a huge percentage.

Ah! Thank you! I have no idea how it works so will completely ignore that option then. Thanks for saving me a lot of wasted time!

They may well reduce the price if it doesn't sell. It's better to make less profit than make a loss. I've seen lots of new build reductions in the last couple of years.

No, you won't. Even if there is a significant difficulty for the developer they won't lop 100k off the headline price. What they have started to do in my area is offer "cash back" deals. The way this is working here is that they still charge you the headline price, so you have to be able to pay the full price. They then give back up to 10% into your bank account. This deal avoids possible litigation from people who have been suckered into the full price because it's "a special offer" and its the headline price that's recorded that you paid. Sneaky I know but developers weren't born under a bush so this is how they are getting around actually being seen to reduce prices in my area.

Pricing on new builds. It said guide price and I wasn’t sure if I could agree to put my own kitchen/bathroom in to bring the price down or if the housing market was in such a slump (I have no idea if it is) that they would reduce it. Completely new to the whole house buying thing.

Yes as I said, at the end of the project they may reduce, but otherwise they don’t, and 100k off? I doubt they’s reduce as much as that

Well you could ask, but i’d very much doubt it. Mortgage companies wouldn’t lend without a kitchen or bathroom installed. New builds will build to the plans.

Relying on the First Homes Scheme which can give you up to a 50% reduction on a new house if you are a FTB. Only problem is I live in a very expensive area and the scheme is capped at £500k so even if I sold a kidney to raise the extra funds it wouldn’t work because the house needs to be priced at £499,999 to be eligible.

Thanks. That’s a good point. I thought it was a pie in the sky idea. Never mind.

Yes, because the main issue isn’t my budget (although I don’t a ridiculous amount spare) it’s the price of the house. Just £1 over a selling price of £500k and it’s not eligible for the scheme. It’s a shame but never mind.

That makes sense, thanks for explaining. I kept seeing incentives but they are no use if they don’t bring down the actual selling price on paper. At least I know it’s not an option. As I said, I am very naive when it comes to all of this and had no idea. Thanks everyone for your advice. Time to look at plan B

Could they sell you th house at £499k and then you pay an additional extra fee for flooring/landscaping/upgrades which would total the rest of the price?

But these are usually extra anyway. In most cases you buy a new build the absolute basic kitchen and bathrooms will be included in that 600k price but if you want better tiles a better tap double oven the garden done the carpets etc thats all over and above your "house" price of 600k

The builders will get much better prices on kitchens and bathrooms and have the skills to fit them so this wouldn’t translate to a major saving at all (for them I mean, re justifying a reduction in price). Their cost of putting in the kitchen would be a fraction of what you would pay.

Good point

Apologies if this is teaching you to suck eggs, OP, but if you genuinely know nothing about the housing market or purchase process and are playing with half a million quid, I’d suggest doing a lot more research before you enter into negotiations with anyone (esp a developer).

You need to really get to know your local area and market inside out in order to get the best deals and be ready to move quickly if something good comes up (macro trends in the economy are obviously worth being aware of, but regional and local property markets have their own ecosystems which can go against overall trends). As a very broad rule of thumb it’s much safer to invest in the most affordable (or worst!) house in the most desirable road or area than vice versa.

The best way to get acquainted with the market is to be on top of it every day - everything’s online so it’s super easy. Research sold prices on Rightmove which will give you detailed info about different streets and locations; see which properties have hung around (generally means they’re overpriced, but can also indicate there’s some other issue putting buyers off); check aerial maps (train lines, rubbish dumps, public footpaths); ‘drive’ around the road and area using street view; look on ‘my town’ type forums and at crime stats to see if there are any hidden problems; set your alerts to be notified as soon as there are new listings that meet your criteria.

The most powerful negotiation tool is knowledge. Be better informed than the estate agents; know how long things have been on the market or what any drawbacks might be; know which properties have achieved the best prices and why. The more you know, the quicker you’ll recognise a good deal or see that something’s overpriced and where you might be able to make a cheeky offer. In your shoes I’d be looking up to £550 - you never know what might be possible with a following wind.

Also be aware of your sunk costs and the different thresholds (stamp duty, conveyancing, fees etc) and if you’re considering flats or apartments always check the lease length, ground rent and service charges (these can be a dealbreaker - things get very expensive very quickly in well maintained properties with lifts etc). With developers, check the small print, covenants and warranties, and research their existing projects in case of any post-purchase issues with build quality etc. Good luck!

Totally new to buying houses so this is all really useful! Thank you!!

Definitely won’t get a £100k reduction even if they are desperate to sell.
They will get someone who will pay full price.

These house developers run a business and costs are projected based on the return value.

My advice OP - buy a house within your budget right now and then sell it on in a few years and you’ll have more capital behind you then!

Depending on your situation it's worth seeing if you could negotiate a lower offer. Ive just offered on a new build which was advertised around 400k and paying just over 350k...they reduced headline price a little and also offered 'gifted deposit' which is money back on completion. Also because the house was already finished and a number of plots available carpets and flooring were included and all appliances.
I am chain free buyer, with a mortgage in place and could move quickly - they wanted 6 weeks exchange! As it happens it's not moved that fast but my point is depending on your buying situation good chance you could negotiate too. Good luck!

The housing market isn't in a slump. Houses are still selling very quickly at either asking price or above where I live (Midlands).