Margin / Profit on a new house ?
 

We are just about to put in an offer on a new house, priced around £460k
Now my brother bought a new house recently, it was up for £530k & he got it for £470k just by hanging on & they kept coming back with lower & lower offers until he said yes (plus he had to be in within 2 weeks of acceptance)

Anyway - this got me thinking about how much profit is in a new house.
Anyone any idea, should I be cheeky & offer £400k ?

Any thoughts welcome.

Ro.

You're just showing off :razz: ;)

Is this a brand new house, just built?

And what area of the UK?

Houses at that sort of value seem to be hard to shift......just look at the same half a million pound houses for sale in the local papers week after week. Be brave, go in low and see what happens!!

I bet there is loads of profit to be made!!!!!

Developers will trade off profit margin for quick sale - that's why they start trying to shift the houses before the development is finished. By the time most of the houses are built, they will owe the financiers a lot of money. The quicker they can get that money paid back, the happier they are and the less interest they end up paying. If you are in a position to buy quickly, you will almost definitely be able to get something off the price (not necessarily £60k, though).

When we started building our new pad, we were advised that deveopers work on the basis that lets say they pay 100k for the land, they spend 100k doing the build, so the new house seels for 300k, ie, 1/3 profit!!

Offering 400k may be pushing it a bit, but I'm sure there will be room to negotiate a decent discount. I was looking at some new build a couple of months ago where several different designs were on offer, and said to the salesman "well those houses at 535k look like they've got the space I'm after, but I'm not going over the 500k stamp duty threshold". His reply was "Well 535k is the price before we discuss a discount"....and he went and got me the keys to show me around one which was nearly finished.

Also worth looking to see what other deals then can do to save you money. For some reason (probably tax/accounting) developers seem to like having as high a recorded "sale" price as possible on the balance sheet...even if they're offering incentives such as paying your stamp duty or upgrading the interior spec.

Gary.

Thanks all. Its a brand new house, just built, in Surrey (Woking / Guildford area)
Going for a final viewing tomorrow so an offer will go in on monday morning......very low £400's ;)

Averages are'nt always helpful across a property market as varied as the UK,but the average sale price in the UK now is about 8% below asking price. That would put your offer at about £420k
You never know the state of the builders finances,as mentioned above at times they really need to get shot. Personally,unless it was a once in a lifetime,one off home I'd come in at a tad over £400k

Which develper is it? Some of them will do BIG discounts if you ask and can complete within 4 weeks or so. A lot of them have year end targets to meet at various times of the year.

The ladies in the show home normaly know the bottom line on prices.

Its a house bulit by Alexon Homes. We are in a chain, but have had a full asking price offer on ours, so we are dependant on how quick the people buying ours can sell theirs etc, so doing a deal to be in by x date would be tricky as we can't move until our buyers are ready.
Our first viewing was with the estate agent, but tomorrow its with the developer showing us around, so we should maybe have a better idea of any deals speaking to him than the estate agent ?

Ro.

If it were me, I'd ask him if they've done any other develpoements locally, then drive round there and have a look, you can tell a lot by how well houses mature, some look great when new, but a few years down the line is what's more important!!

Yeh exactly, you can get seduced by all the new-ness of brand new houses, give it 30mins of the wife & 2 kids in there & will see how new it looks then !

It's not a developer that i've heard of to be honest and a very brief google search didn't bring anything up. You do tend to find that with a smaller company cash flow can be an issue so they may want to do a deal. It might be worth trying a low offer, you might not get it but they can only say no! Try speaking to the developer first but he may tell you to call the agent as he is paying them to act for him.

The housing market seems to have had a very good start to the year, so they may not want to drop too much.

Good luck!

Sorry - typo...its Alexson Developments trading as Alexson Homes.
Still - they seem quite a small outfit - the brochure says "a small privately owned building company"
So not sure if thats a good or bad thing wrt discounting ?