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It's a hypothetical thing at the moment, but house buying will resume at some point.
Lots of places in Scotland are advertised as offers over - obviously, it'll be very market-dependent, but are there rules of thumb that says the house is priced competitively, but the sellers are actually not going to entertain an offer of less than advertised price plus 20% ??
I'd love to get a sense for how it works - I have a strict budget and at the moment I would need to rule out offers over properties as I don't have the patience or cash to play games. Or is that too short-sighted a view?
but the sellers are actually not going to entertain an offer of less than advertised price plus 20% ??
Very dependent on the individual property / location etc.
If you like a house, offer what you genuinely think it's worth regardless if that's over or under the "offers over" price.
As perchy says, its completely dependant on 'desirability' of the property as the other bidders may be willing to throw silly money at, particularly in places like Glasgow's west end. We put offers in on a few properties last year and made decisions based on how much extra up front we were willing and able to put in on top of mortgage deposit and how much we felt we would need to initially spend on each.
Got out bid on all and ended buying a fixed price new build!
Its a bit of a hangover from the past. Effectively its an auction - there will be a closing date and everyone who is interested puts in a bid and at the closing date the bids are checked and whoever puts the highest in gets it
There are various ways of playing it - a solicitor will be able to advise.
The 20% thig really depends on how popular the house is - the house we last bought 2ish years ago had little interest from other parties so we got it for a lot less than 20%. The house I sold at that time was in a very desirable location and had a lot of interest; I went to closing date and got circa 40% over.
Have a friendly chat with the owner during a visit, find out how much interest there has been (subtly!) and find out the sort of value the owner really has in mind. If both your values are in a similar range, great. if there is a chasm between them walk away.
What Perchy said. If it's Edinburgh or west end Glasgow though it's going to be a different story than other parts of Scotland. I sold a place in Edinburgh last year, at the lower end of the market, that went for 18% over the asking price. Conversely, I only paid 1.3% over asking price for our family home just outside Perth.
Just be aware that whilst some solicitors will be helpful, they also don't like change or pissing off other solicitors in the area that they are working with/against day in day out - understandably. So solicitors may not always behave or act in your best interest.
As an example, the first place I bought outside Edinburgh was advertised as offers over some figure. As I'd already been burned with the closed bid (closed my arse!) auction process a few times before, I insisted on a time limit for my offer to be accepted. Solicitors weren't happy, but I got it for the price I needed it to be.
So don't just assume that you have to play the game their way - unless there is going to be huge demand.
you can always just ask the seller what they want. I had cash as sold my house, told him I had a pot of cash so can make an offer now but what did he want, saved both of us time and hassle.
It's a buyers market at the moment, well Aberdeen is once this has all settled down
I would need to rule out offers over properties as I don’t have the patience or cash to play games. Or is that too short-sighted a view?
Its house buying. You need to play the games if you want get a good deal and the property you want rather than settling. Personally I wouldn't rule anything out. You need to consider everything; too small, too expensive, not enough bedrooms, wrong location, etc. Doing that makes it much easier to spot the right property, and you need to be able to realise it is the right one very quickly or you will miss out.
What about buying a cheap plot with a knackered old bungalow, knocking it down and rebuilding with a modern kit home?
What about buying a cheap plot with a knackered old bungalow, knocking it down and rebuilding with a modern kit home?
I love that idea - but I think my time and budget would be too limited to make it happen this time around, sadly.
What about buying a cheap plot with a knackered old bungalow, knocking it down and rebuilding with a modern kit home?
Chances are that in a decent location it will still be expensive. The last one of those that I saw with planning permission granted, albeit quite a few years ago now, was for £250k. There weren't even any pictures of the inside of the cottage.
Like with any house, it is worth what someone is prepared to pay.
Make your offer based on what you are prepared to pay to secure that property.
Our experience of buying in Scotland is that the difference of buying in Scotland 6 years ago, 10 years ago and 20 years ago, compared to England, is less than it was from a technical/legal process.
Do remember that mortgage companies go off the lower of the offers above, asking price or valuation. If you offer 20% above, you need 20% of deposit on top of the LTV deposit amount.
What about buying a cheap plot with a knackered old bungalow, knocking it down and rebuilding with a modern kit home?
Because every other person watches dream house and grand designs now, so plots are way more expensive than ever.
We have a small plot on a very busy road in Dunblane, bought 10 years ago with bunglow on for £130k. Bungalow bulldozed and now a pile of rubble is £210k for two semi-detached house plots for small three bed houses with tiny garden.
If you offer 20% above, you need 20% of deposit on top of the LTV deposit amount.
Yeah, that's the kicker for me - tight budget and little wiggle room on the LTV. Hence the offers over thing annoys as it potentially forces me down the new build route... my experience of new build in England is not encouraging 🙁
Things rarely went to closing date and bids in Edinburgh recently, you almost never see a closing date advertised any more. You can register a "note of interest" which means you will be informed if somebody else makes an offer.
A lot of houses now go for fixed price - but again that is just a starting point.
Who knows what the market will be like in Edinburgh once all the now vacant AirBnBs get dumped back on the market? You could do well by putting in a super cheeky offer, see if you like their counter-offer.
I think what happens to the market will change things drastically and offers over may be rare in the coming recession.
Scottish system is a nightmare for buyers. Unlike in England you are obliged to make an offer through a solicitor who is supposed to advise you, but usually won't get paid anything for an unsuccessful offer on a property. This means they generally aren't particularly helpful as the majority of bids in popular areas will fail and waste their time. They just say to bid higher.
It also makes it impossible to put in speculative offers until you get a property at a good price. I had my solicitor ranting at me for wasting their time with what they considered a low offer on just my 2nd property bid. I was a cash buyer and wanted to offer 20% over home report which seemed sensible to me. All they would tell me was to bid as much as possible whilst refusing to advise what was realistic.
With the sealed bid system you have no choice but to bid high, and buyers are effectively gambling. The seller wins every time.
The English system where there is back and forth till a price is agreed is much fairer.
Hopefully there will be a glut of air bnb's for sale in Edinburgh soon and prices will plummet.
The English system where there is back and forth till a price is agreed is much fairer.
As folk have already pointed out, this happens increasingly more often in Scotland.
What we don't tend to suffer from is the whole "chain" issue where dates and purchases are affected by others.
OP - find a house you are interested in. Decide on how much you are prepared to pay. Make an offer, with an acceptance date. Be prepared to walk away. This is obviously easier the less picky you are about the house and hence the availability of alternatives.
o/o is a bit of a gamble. If it's desirable and lots of notices of interest come in then it may well go to sealed bids, which is great for seller (i know someone who got almost 100% of the asking price, led the walking team in a culcutta match).
If no interest it might go to "offer in the region of".
There's no magic % that will get it just lots of variables.
The English system where there is back and forth till a price is agreed is much fairer.
That is what happened when I sold my flat. In Edinburgh. 10 years ago. The Scottish system has many flaws, although the home report fixed the biggest one of those, but overall the system works far better than in England.
Yes the air b n b market is wrecked this year, I looked at a small house in Edinburgh, researched the area and saw both neighbouring houses were air bnbs as well. Spoke to a mate who knows the edi market he said just offer the owner what you think it's worth. I recall the offers over number was just a tease price.
Didn't pursue it as I read the reviews of the property from past renters. Put me right off.
What about buying a cheap plot with a knackered old bungalow, knocking it down and rebuilding with a modern kit home?
My BIL's brother bought a house in Edinburgh O/O 600k, he paid 1.1M for it, and the amount he's spent on it, he'd have been as well bulldozing it. Old couple who owned it had done nothing to it for decades.
Scottish system is a nightmare for buyers
This is what I thought until I actually bought a house here. Easiest house purchase I’ve ever made, I didn’t offer over as advertised, I offered under and it was excepted. A few weeks later I had the keys and moved in.
My buying position helped as I was ready to go so was a more attractive offer than someone with more funds but a longer wait to secure them.
OP don’t be put off by offers over, I thought I couldn’t afford my place until my solicitor spoke to the owner.
wardee - that has not been my experience at all - I have had excellent lawyers three times now buying and selling houses - one of them frequents this site. They always gave good advice and were quite happy to horse trade a bit with the opposing side, even talked me in to lower offers than I had the appetite for!
The English system of chains collapsing sounds like a nightmare of stress. That doesn't happen in Scotland.
The English system of chains collapsing sounds like a nightmare of stress. That doesn’t happen in Scotland.
Maybe less often, but it certainly can and does.
People (I'm assuming non Scots) seem to be confusing asking price, valuation and selling price. Here's how it works in Scotland.
We have to get a home report done by a surveyor. This includes the valuation that will be used by the banks when evaluating LTV stuff. This home report with valuation is publicly available to viewers, bidders and joe bloggs if they want it.
The estate agent than advertises the property with an offers over price. This will be below the home report valuation, and is designed to "get people in the door". It's bizarre but that's the way it works.
When it comes to bidding, a lot depends on how desirable the place is. If it's really desirable, then yeah 10%-20% over the valuation is entirely possible, and yes the buyer needs to fund the difference over the valuation.
My mate sold his place recently. Stunning 2 bed tenement flat.
Home report value = £180,000
"Offers over" number = £170,000
Sold price = £206,000
So in that case the buyer has to find a deposit for a decent LTV based on a home report value of £180k, then also find £26k to fund the difference between the valuation and what she bid.
Basically the "offers over" number is irrelavant. It's the home report valuations that matters
I'm in the process of selling in England and looking to buy in Scotland. I'm completely stuck until we get to exchanging contracts, which is about 8 weeks / 2/3 of the way through - buyers can pull out without liability. We're 7 weeks in and still waiting for searches. Hoping that we'll get to exchange in the next couple of weeks / some lockdown restrictions removed so we can at least go and view some properties. Looking to self-build and hoping we'll have a roof over our heads by winter. Scottish system seems far more sensible, as offers become legally binding - although the 'offers over' process looks overkill when you see the same property re-listed again and again with a revised offer date.
<blockquote=TJ> at the closing date the bids are checked and whoever puts the highest in gets it
its not necessarily the highest bidder - the best offer wins. Its increasingly common to have clauses added to offers that make them worthless, or at least less attractive. Whilst £10K difference might still see the biggest value win, I know a few people who have accepted a 2nd place offer because the first doesn't have a mortgage yet, or wants some particular indemnity/report etc. (I have even heard of someone who's solicitor suggested that the other sides solicitior was a total PITA and never completes on time and was it really worth £1200 more - they ignored the solicitor took the bigger offer, and ultimately said he was right!).
There are various ways of playing it – a solicitor will be able to advise.
Solicitors aren't particularly helpful on pricing strategy. They will be able to tell you what is common in the local market though.
Scottish system seems far more sensible, as offers become legally binding – although the ‘offers over’ process looks overkill when you see the same property re-listed again and again with a revised offer date.
There's no need to either set a closing date or wait for a closing date before putting in an offer. I expect we will see a LOT less buying and selling going on in the next 18-24 months and so more fixed prices, or reasonable offers from credible buyers being accepted. It will vary from place to place. Certainly be less second home buying for the next 6 months at least; and I expect many of the Edinburgh Air BnBs will be financially struggling and keen to offload if they can break even.
Scottish system is a nightmare for buyers. Unlike in England you are obliged to make an offer through a solicitor who is supposed to advise you, but usually won’t get paid anything for an unsuccessful offer on a property. This means they generally aren’t particularly helpful as the majority of bids in popular areas will fail and waste their time. They just say to bid higher.
Preparing an offer is a very quick job for an experienced solicitor who will factor in multiple failed offers into their fixed fee if thats what you agreed.
It also makes it impossible to put in speculative offers until you get a property at a good price.
it doesn't at all.
With the sealed bid system you have no choice but to bid high, and buyers are effectively gambling. The seller wins every time.
OK you can use sealed bids in England too (cynically I have more trust that in Scotland the bids are actually sealed because they are usually made to a solicitor rather than an estate agent). You don't need to bid high at all. Its not that rare for their to be only one or two actual offers at the closing date - and whilst the seller isn't required to take any offer they usually will if that is what is on the table. There are certainly stories of people being made informal offers during viewings, declining them and then only smaller offers being received at the closing date. Certainly the last properly we sold, we were offered a very attractive offer but clearly on the condition we didn't go to closing, and that he wouldn't get involved in closing. We had already set a closing date and felt it was unfair to others to not stick to it (we had been in that position as buyers and it really pissed us off), so stuck to our guns. I think the offer we sold to was about £300 higher than the one at the viewing (from someone different). The only other offer was substantially lower. We gambled, we got lucky - but it could easily have been the other way.
The English system where there is back and forth till a price is agreed is much fairer.
You can easily do that in Scotland. The only time that is impossible is in boom times when houses get listed and go to closing in a week.
Scottish system seems far more sensible, as offers become legally binding
Offers aren't legally binding in Scotland. Once an offer is accepted, either side can still pull out of the sale before the sale is concluded.
Offers aren’t legally binding in Scotland. Once an offer is accepted, either side can still pull out of the sale before the sale is concluded.
That is mostly true in that no one can force the purchase. The buyer of a failed bid can be made liable for all costs of the sale / property until it is ultimately sold however.
Case in point Buyer puts in offer, it is accepted, however the buyer does not have a mortgage in place and is turned down upon application. The failed buyer can then be sued so then liable for on going mortgage & selling costs until a new buyer is found.
Once the sale is agreed, it is very hard for either party to renegade without significant penalty, unlike, as I understand, the English system
In the real world, I don't think that happens particularly often, I've experienced it a couple of times, and both times my solicitor has said it's possible to pursue them, but will cost a kidney, and take an age. 2 different solicitors.
Best just to forget and move on.
it is very hard for either party to renegade
That would be ill behaviour
Also afaik all house sale stuff in Scotland is stopped and can take longer when working(especially if the solicitor is a bit useless) because it is ink on paper contracts.
My flat in Leith was bought through a local firm on Bernard st. It was proper piles of paperwork old school. But they knew where all the paper was and were weirdly efficient, much more so than the ones I sold with who were wizzy and computery.
Once the sale is agreed, it is very hard for either party to renegade without significant penalty, unlike, as I understand, the English system
Depends on what you mean by agreed, but I was a right royal pain the arse buying my last place because there was some weird shit (technical terminology) in the title which needed to be bottomed out before the missives could be concluded. Unfortunately the seller missed out on her planned purchase as a result. Thankfully, she ended up finding somewhere that she ultimately was happier with.
I sold my place last year. 1st "buyer" pulled out about 5 weeks after I'd accepted their offer. No reason given and nothing I could do as the contract wasn't concluded.
Also afaik all house sale stuff in Scotland is stopped
Back up and running now with a temporary solution agreed between Registers of Scotland, The Scottish Law Society and the majority of lenders. basically RoS couldn't register any sales due to closing because of this lockdown and no staff being physically in the offices which they need to be to conclude a house sale
In the real world, I don’t think that happens particularly often, I’ve experienced it a couple of times, and both times my solicitor has said it’s possible to pursue them, but will cost a kidney, and take an age. 2 different solicitors.
I sued someone for this when I was a solicitor, £15K iirc, fees maybe £750, no defence.