Over the course of this year, we have seen a significant change in how properties are being marketed in and around Edinburgh, with more and more properties being advertised at ‘Offers Over’. This year, so far, some 51% of properties marketed by MOV8 have been advertised in this way.
If you are looking at purchasing a property marketed as ‘Offers Over’, the main question you will probably be asking is “how much will I need to pay to get this property?”.
While it is true that the successful amount offered to secure a purchase will vary from property to property, we can use statistic from sales that have taken place in recent months to help property sellers to have an informed and realistic picture of the offers that their home might achieve, whilst giving buyers an understanding of how much a buyer might need to bid to be successful.
What is ‘Offers Over’?
Before the credit crunch, and the crash in house prices from 2008 onward, most properties were marketed as ‘Offers Over’ an asking price. Artificially low asking prices meant that properties were selling for an average of 25-30% over the Offers Over price. Home Reports were only introduced in late 2008, so buyers didn’t have a surveyor’s valuation to base their offer on and there was a huge element of guesswork involved.
For Offers Over to work, there has to be competition between potential buyers. If there is not competition, buyers will see the asking price, most often considerably lower than the price that the seller is hoping for, and make an offer in the region of that price.
When competition is high, however, potential buyers are likely to bid against each other, and drive the sale price higher.
Why is ‘Offers Over’ Making a Comeback?
So what has been happening over the last couple of years? Recent trends indicate that ‘Offers Over’ is continuing to grow in popularity, building on its growth in 2014. This is a trend that, quite simply, would not be continuing if there wasn’t increasing demand within the market, as it requires competition amongst property buyers for it to work.
Between January and September 2014, we saw 22% of the properties sold by MOV8 marketed using ‘Offers Over’. In the same period this year, January to September 2015, the percentage of properties sold using ‘Offers Over’ had risen sharply to 51%.
The latest ESPC statistics, from their September 2015 house price report, tell us that “73% of properties are coming to market as offers over, compared with 54% in 2014, and 37% in 2013.” This demonstrates, quite clearly, the growing trend and popularity of the ‘Offers Over’ approach to marketing.
This is continuing to be be driven, in part, by a belief amongst some property sellers that Chartered Surveyors’ Home Report valuations aren’t reflecting the current reality of price rises being driven by low supply and high demand amongst property buyers.
Indeed, the latest ESPC statistics tell us that the volume of property sales in East Central Scotland between July and September this year has risen by 11.1%, while the number of new properties brought onto the market has decreased by 2.4% for the same period.
By using ‘Offers Over’, sellers are placing faith in a market that can support higher prices than the Home Reports are suggesting by taking advantage of the competition that is generated by demand outstripping supply.
How Much Over the ‘Offers Over’ Price Are Buyers Paying?
According to the latest ESPC house price report, properties marketed as ‘Offers Over’ are achieving on, on average, 6.5% over the asking price. At MOV8 we have seen the amount achieved over the ‘Offers Over’ asking price increase from 3.6% in 2014 to 5% in the same period in 2015. Obviously care has to be taken when looking at such averages as different types of properties in different areas attract different levels of interest and competition, so the figures will vary from estate agent to estate agent and from local area to local area.
Where Are Offers Over Premiums Highest?
As you might expect, some areas of the City are likely to experience more competition when marketed as ‘Offers Over’. The standouts that we have noticed are not too surprising, with EH9, which includes Marchmont and Blackford, averaging 6.8% above the asking price achieved for properties marketed at ‘Offers Over’, followed closely by EH10 including Bruntsfield and Morningside , averaging 6.7% above the asking price.
While there has been an increase across the board for the price achieved for properties marketed at ‘Offers Over’, certain areas have experienced a larger increase that others. Notable areas include EH14, taking in Juniper Green, Currie and on to Balerno, which has seen an average increase of 4.8%, January to September this year, when compared with the same period in 2014.
So What Does This All Mean to You?
If you are a seller, this is of course only good news. If your property is marketed ‘Offers Over’, and receives a lot of interest, you could end up with a very successful result. Potential buyers who don’t want to miss-out are more likely to try and find that little bit extra to submit the highest offer.
Every situation is, however, unique and despite the understandable appeal of the ‘Offers Over’ approach, many factors should be taken into consideration.
Just a few things to consider if you are a property seller are:
The area your property is in and the local market conditions
The type of property
Whether you are looking for a quick sale or you have enough time to wait for sufficient interest to allow you to set a Closing Date?
The estate agent you choose to market your property with should be able to advise you on these and provide you with recommendations about pricing strategy.
The continuing issue of demand outstripping supply means that the ‘Offers Over’ approach is likely to be with us for some time to come.
We hope that this article has been useful in giving you an idea of how much over the asking price you should bid. There are further resources on our website with advice on the questions of, ‘How much over the offers over price should I bid?’ and ‘How can I avoid Closing Dates’. It must be stressed that, as a buyer, the advice does vary from case to case and we are delighted for one of our purchasing specialists to help you if you are thinking of buying an ‘Offers Over’ property and need more advice.
If you are thinking about selling your property, please do get in touch to organise a free property valuation or to have a preliminary chat with us about the selling process in Scotland, including pricing strategies. Our valuers will help you with suggestions for maximising the appeal of your property to buyers as well as discuss current market conditions with you.
To arrange your free property valuation or selling quote today, just call 0345 646 0208 or email [email protected] and we will organise an appointment at your convenience. And to keep up to date with all the latest market news and information you can sign up to our monthly newsletter today.