Phil Spencer – Buying From A Developer
Purchasers who aspire to live in a fresh, new, modern environment but don’t have time or expertise to do the work themselves, feel that in paying a premium for a refurbished property they’ll get the finished article they desire. When everything goes smoothly it seems a fair trade: cash, in exchange for goods and services.
As many Londoners end up trying to negotiate one of their more important decisions against experienced property dealers I felt it would be useful to explain in a bit more about what you can expect on the way through and how best to handle things.
There are plenty of advantages as well as disadvantages to buying property from someone who trades in bricks and mortar for a living but you should recognise a different set of rules apply. Simply put, this is commerce. Expect it to be treated, and treat it yourself as a business transaction. Do not consider the deal concluded until you’re actually happily living in the property. Experience says things are not always as they seem and as you’re the one considering spending vast wads of cash there’s nothing wrong with treading carefully and being a bit suspicious.
Let’s say you’ve seen a property you like; the quality of workmanship seems good and you’re keen to buy. Try to do a bit of research into the developer. Have they been around a while? How many projects do they do a year? What do people in the market say about them or the quality of their work? You’ll need to confirm precisely to what specification the property will be finished within the price being asked. Whilst it’s unreasonable to ask a developer to alter their own plans prior to exchanging contracts you have an excellent opportunity at the negotiation stage to request any alterations. It’ll save time and trouble – isn’t that why you’re buying a refurbished property? If you can get wardrobes built-in or colour schemes changed before you actually move in. Everything is up for negotiation. If you’re paying the premium for a newly refurbished home make sure it’s going to be finished exactly how you want it.
Offers made on property are always Subject to Contract and Survey. When buying newly refurbished; your offer should also include the level of specification and finish you expect, any changes to existing plans or decorations, a clear opportunity for you to agree a snagging list prior to completion as well as some form of guarantee from the developer to return during the first few months of occupation to fix things which subsequently go wrong. If they’re proud of their product why not? All these issues will determine the level at which you offer. Agreements must be confirmed in writing to everyone involved. Remember this is business and it pays to give attention to detail. Get it absolutely right to start with. Once you’ve agreed a deal don’t accept, and don’t anticipate, the goalposts being moved. As there are certain guarantees and certificates that should be made available, you must also be sure to let your solicitor know the property you’re buying has just been refurbished.
The chances are you’ll be up against someone who knows all the tricks in the book. Right up until exchange of Contracts they’re likely to keep all their options open (just as you are!). Will somebody else offer more money? Might somebody complete the purchase faster? To minimise risk; right from the start, you should be actively demonstrating both your commitment to the property and ability to perform on the deal. You’ll then be free to request the same in return.
Property dealers often experience cash flow problems and as they’re constantly looking for the next deal, time costs money. Cash is a commodity that gets borrowed, used and returned. The quicker the cash is turned around the better the profit margins for the developer. As soon as a deals been agreed they will lean heavily on agents, solicitors and purchasers to make things happen swiftly. The chances are you will be put under considerable pressure. They know that if momentum is gained during the conveyancing process you’re less likely to have second thoughts on the way through. Nevertheless, attention to detail is critical at this stage. Whilst you need to ensure your surveyor, Mortgage Company and solicitor are working to an agreed timescale – don’t allow either your emotions or the apparent necessity for speed to cloud your judgement. There is only one time to ensure you have satisfactory responses to your own and your solicitors formal enquiries and that’s before you exchange Contracts. It’s neither your surveyor nor your solicitor who’s spending the money, or going to be living there so check things yourself and watch your own back.
When you exchange and agree a date for completion, attached to the Contract should be the list of alterations, changes or snagging items you agreed at the outset. This is the first time you can relax, secure in the knowledge you’ve bought what you wanted and no one else can scupper the deal. It also means that Completion is now subject to your own personal satisfaction of the items on the list. You should look around the property a couple of days before the completion date to check whether you’re happy with the finished article. If agreements have been correctly drafted you should now be in a strong position to ensure you get what you want. Don’t leave it until the last-minute though you might well need to visit several times in the last few days before signing things off.
My company has purchased many properties from developers and on occasion we’ve been able to turn this situation to our advantage. Lets just say our clients do get the finished article!