In Scotland, one of the key features of the property market is the “offers over” invitation by the selling estate agent when they bring a house to the market. Coupled with that is the requirement to submit an offer on the Closing Date – the date which the selling agent sets on which all offers should be received.
What this means in real terms is that buyers are faced with a blind bidding situation where they submit their offer and await the response.
If you have been trying to buy a new house, this will be all too familiar to you. You are trying to buy a new house and the sellers are trying to make as much money from the sale as they can. There tends to be no middle ground. Currently, there are more people looking for properties than there are on the market. This means it is a sellers’ market forcing house prices up and greater competition for the buyers!
How does “Offers Over” work?
Sellers usually engage an estate agent when they are putting their house on the market. The estate agent will view the house and give an indication of expected price. They tend to be guided by the valuation element of the Home Report but any estate agent who is familiar with the area will be able to give the seller an accurate assessment of value.
However, when there is a sellers’ market, the estate agent will know that there will be many buyers trying to buy. So, they will set an asking price to attract interest and advertise the house inviting “offers over” that asking price.
Once a number of buyers have viewed the property and expressed a firm interest in buying, the estate agent will fix a closing date on which all offers are to be received. On that date, interested buyers submit their offer and the seller will discuss this with their estate agent and solicitor and decide which is the best option.
How much should a buyer offer?
This is the hardest question any buyer needs to answer when trying to buy a property in an offers over situation.
First, before you start thinking about price, ask your solicitor to “note your interest” in the property. This will mean that when a closing date is set, the seller’s estate agent will let your solicitor know when that is.
When you are considering the price, there are three elements you should take into account:
• What did the surveyor assess as the value of the house? The Home Report contains a valuation of the property. This is what the surveyor who prepared the Home Report, in his professional opinion, thinks it is worth. However, when there is competition with other buyers, be prepared to pay more.
• How much are you prepared to pay for the house? Clearly, you cannot pay more than you have available to you through your deposit and any mortgage. Do your sums and work out how much you can afford to pay.
• If you are selling your own house, have you sold yet? If you have, you will know how much you will have available after repaying any mortgage you currently have. If you have not yet sold you need to be cautious about entering into a purchase contract, irrespective of the price you decide to pay.
Once you have considered these factors, the best advice we can offer at the closing date is to offer as much as you can comfortably afford!