New Developments and Sales Incentives – Handle with Care

The sales techniques employed by builders' sales offices are particularly sophisticated, and inexperienced buyers should take independent advice before signing any sales documents, according to Andrew Yates, Head of Residential Property at Elliot Mather Solicitors in Chesterfield.

Non-refundable deposits

Where non-refundable deposits are requested, we have seen cases where pressure has been put on purchasers to accept unfavourable contractual terms with the threat that if they withdraw, they will lose their deposit. We always advise clients never to pay a non-refundable deposit.

Part exchange

If the developer has agreed to take your property in exchange, they may want the right to try and sell your property as soon as possible and this is not unreasonable.  Watch out for developers who ask you to sign a form appointing them sole agents for a fixed period. During this period, even if you have cancelled your other arrangements with them, you could have to pay commission to them on a sale, even if arranged through another agent, or privately.  Take legal advice before signing anything, even in a show home!

If you are part exchanging your property, you may have to pay to have your boiler and electrics checked prior to exchange. Money may have to be retained on completion by the builder’s solicitors until they are satisfied that no damage has been caused to the property they have taken in part exchange.

Sales particulars

Make sure you know what is actually included and ask to see a detailed specification. The plot you are buying may not include everything like the show home and is sometimes an unfair comparison!

Ask about the quantity and quality of items included, such as:

• kitchen equipment
• landscaping
• carpeting/tiling

• electrical sockets

Snags

If the development is half completed and there are people living there, why not knock on a door or two and find out whether they had any difficulties. Ask about whether the property was finished on time.

Take your time with the snagging list and don’t feel pressurised.

Surrounding construction

Bear in mind that new developments are often a building site for some time after completion.  Landscaping works, or second and subsequent phases can impinge upon your peace and quiet for some time and effect a valuation for second-hand properties.

Incentives

Builders want to make money – be aware if you are offered incentives such as:

• cashbacks
• kitchen upgrade
• free turfing
• deposit paid

The actual valuation may be inflated and you could be paying more than the property would be worth, which will cause a problem if you wish to sell in the short term.

All incentives have to be referred to any proposed mortgage company and may have an impact on how much you can borrow. We would advise you discuss your own individual circumstances with an independent financial advisor.

Good price?

If the sales office reduce the sale price by £10,000 this doesn’t means the identical plot next door didn’t get £20,000 off the asking price. Do some research on web sites, such as Rightmove, to see how much the neighbouring plots sold for. Don’t appear too eager!