Last in, best served

It doesn't always pay to be the first to purchase an off-plan development. Chris Partridge has tips for canny buyers

When a developer comes to sell the last few units on a massive project, they are often keen to get out and move on. They may still be employing a salesperson in a heated office on site, possibly in the show flat that is now showing the wear and tear of a thousand visitors. But those few units just will not shift... until a canny buyer comes along with the right offer.

When a developer comes to sell the last few units on a massive project, they are often keen to get out and move on. They may still be employing a salesperson in a heated office on site, possibly in the show flat that is now showing the wear and tear of a thousand visitors. But those few units just will not shift... until a canny buyer comes along with the right offer.

During the property boom this rarely happened, because investors were clamouring to buy as early as possible to gain the maximum capital gain. But now that prices are more stable, developments are reaching completion with some units remaining unsold.

Recently, Fairview had a big clearout of "standing stock" - apartments that have been completed but not sold. These are bad news for developers because the builder will have been paid in full.

Dave Reed, sales director of Fairview, says advertising all their unsold stock made enough noise to bring them to the notice of investors. "We had stock units offered at advantageous prices, just to bring them to investors' attention, and we sold eight or nine over the weekend."

The attraction was not sale prices, Reed claims, but a guaranteed 10 per cent return on investment for a year.

Incentives such as guaranteed returns, extra fixtures and fitting such as carpets, stamp duty paid, legal expenses paid and "move in free" deals are becoming more common as the property market slows down.

Fairview is offering a year's season ticket to buyers at four of its developments close to popular commuter stations - Victory Hill in Basingstoke; The Crescent, in Maidstone; The Courtyard in Grays; and Boundary Park in Hoddesdon. At the latter, incentives include 5 per cent deposit paid, stamp duty paid and £350 per month mortgage subsidy on the two-bedroom apartments. For details on all Fairview developments, call 0800 731 4477.

Most incentives are aimed at owner-occupiers - few private investors will have any use for the 100 per cent home-exchange deal currently on offer by Barratt, for example.

But there are non-financial pros and cons of buying last, says Lynne Whiteman, sales and marketing director of Antler Homes. "Buying last means you don't get the nuisance of site traffic and you join a community already in the making," she points out. "The disadvantages are that you do not get the pick of the plots and you don't get a choice of finishes."

Investors who buy off-plan can usually only negotiate the price down if they are buying in bulk - the developer cannot afford to drop the price, in case word gets out and everyone wants a discount.

At the end of the project, other concerns come into play, such as how much the developer needs the money, and whether other plots on the development have already come on to the open market at a higher (or lower) price.

It is necessary to do some homework, particularly a trawl through local estate agents for comparable properties. To get the best price, however, it is necessary to find out what position the developer is in. A bit of deviousness comes in handy here.

Developers are not always in a hurry to sell the rump of a development. If the developer has paid the bills with the money from the first units, the money from the last units will be effectively all profit, as Dominic Grace of Savills explains: "Picking up the tail ends can be a good idea, but even if a development has sold well all the profit may be tied up in the last few units, so the developer may dig their heels in."

But developers may have weaknesses that an investor can exploit, especially publicly quoted companies with shareholders to placate. "If the end of the financial year is looming they will want to take the profit this year rather than next, so it is often an opportunity to do a good deal," Grace says.

It may also pay to get friendly with the sales staff, in order to judge their mood, he adds. "Sales staff can be indiscreet, and if the sales director has been charging around desperate to move stock, the pressure can be transmitted to the staff."

The sales director may also be influenced by commitments made when setting the budgets for the projects. Going in under budget may not be disastrous for the company but the board may well regard it as a failure. "He will always want to sell standing stock because the builder will have been paid in full and he could have planned to sell all the units by the time of completion," Grace explains.

In any event, never regard the price on the sticker as final. "If you don't want the free carpet, counter with a cash discount," Grace says. "Always try an offer."