Oct 08

I have had a lot of people asking this question recently, so here is a bit of an email that I just sent to a property buyer to try and explain what it means.

‘Offers in the Region of’ and ‘Offers Around’ is a bit of a moveable feast depending on the prevailing property market conditions. The last 12 months saw relentless downward pressure on property prices. ‘Offers Around’ therefore usually translated as ‘Offers Slight Below’ the asking price.

However, in the last couple of months we’ve seen property prices rising again. Less properties are on the market than is normally the case and, although buyer numbers probably haven’t gone up across the market, there is therefore more competition for those properties that are currently going on the market. This has resulted in more Closing Dates being set and more ‘blind bidding’.

As a result, Offers Around/In the Region of has translated for the last couple of months as ‘Offers Slightly Over’ the asking price. In some cases, particularly in the sought-after family homes sector, this has translated into ‘Offers Quite a Bit Over’ the asking price.

So what is ‘Offers Around’ or ‘Offers in the Region of’ going to mean in the foreseeable future?

Well, if supply levels rise a bit, or if buyer confidence dips a bit, then I’d expect to see less competition for the properties that are on the market/have just come to the market and therefore I’d expect to see prices starting to fall back a bit and for the ‘premium’ paid over the ‘Offers Around’ price to drop back.

However, if supply continues to be low (and we are seeing no signs of floods of properties coming to the market) then we might continue to see ‘Offers Around’ translating into ‘Offers Slightly Over’ until such times as those prevailing market conditions change.

The good news for property buyers is that we have certainly not seen a return to the days where ‘Offers Over’ (the mots du jour not so long ago) translated into a premium of around 15 to 25% over the ‘Offers Over’ asking price. And we are unlikely to. Why?

Whereas ‘Offers Around/Offers in the Region of’ prices are usually set by reference to the Home Report value and therefore are quite close to the notional value of the property (according to a surveyor), ‘Offers Over’ prices were set quite a bit below the price that the seller/agent actually expected to achieve. Therefore the ‘premium’ over the ‘Offers Over’ price was naturally higher than the premium currently being achieved over the ‘Offers Around/Offers in the Region of’ price.

I hope that this is of some help to any of you who have been asking yourselves this question!

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Oct 02

The last couple of months have seen a bit of a spike in buying activity and, sadly for buyers, a return to the days of Closing Dates and blind bidding.  Closing Dates and blind bidding have been confusing buyers since I started working in this field so hopefully this will be useful to any of you thinking of buying a home at the moment.

So the question is: how do you, as a buyer, decide what your bid should be at a Closing Date?

How to Decide What to Bid at a Closing Date?

(a)    Determine how much it is worth to YOU…(even if it fell in value a little in the next couple of years, how long are you likely to be there and , if you had to move in that time, could you absorb that loss?)

(b)   Make your best bid at the closing date

(c)    Keep the date of entry as short as possible

(d)   Make sure that your solicitor makes clear to the seller’s solicitor in a covering note to go with the offer what your finance position is, that you are not in a chain, and any other positive factors (e.g. you would be able to be flexible on date of entry – most buyers want a quick date of entry but some actually will need a longer, or sometimes much longer, date of entry depending on the position of their purchase or other factors, so flexibility is useful)

(e)   Don’t get carried away – there is not a lot of property on the market at the moment therefore competition is fierce for those that are on the market at the moment and we are currently in the peak buying season (autumn), however the HBOS and RBS redundancies will hit Edinburgh from next month onwards, the general economy is hardly in great shape, lending figures don’t appear to be heading northwards and therefore the underlying factors bolstering confidence and therefore house prices remains fairly weak.

I can’t predict which way things will go but, for what it’s worth, I think that this is a supply/demand-led stabilisation due to low supply to market, HBOS/RBS could have a significant effect in Edinburgh in particular, and as we head towards winter and longer nights/shorter days and lower general buying demand then there will be more good buys around especially in the family home market which naturally sees a spike in demand after the school holidays.

If you are afraid that winter will be very quiet, with very little coming on to the market in that time, and you fear that this is your last chance to get in there before the winter sets in, what advice could I give?  For what it is worth, this is a really tough call and it is probably partly this fear that has been driving the bidding frenzy we’re recently been seeing on a lot of properties.

My educated guess is that there probably won’t be a huge amount coming on the market going in to winter.  However, there are always less buyers in the winter too so this may balance out.

In conclusion, if you’re not desperate to move in the next few months and your focus is more on securing a good buy, I’d suggest that the feeding frenzy we’ve currently seeing in the marketplace for desirable flats and houses will fall back as we move towards shorter days, longer nights and the Christmas holidays.  At that time of year there is always a lull in the market as people have other things to do with their time and money.  Therefore, similar properties will not cost quite as much owing to the drop in competition for them.

I wouldn’t go so far as to wager my life on that analysis, but based on everything I’ve seen in the last few years, I’d wager a fair few bucks on it!

ARE YOU THINKING OF BUYING OR SELLING?  WOULD YOU LIKE TO DISCUSS ANY OF THESE ISSUES WITH ME?

If so, I’ll be delighted to help and to answer any queries that you might have.  Please just drop me a line by email and I’ll get back to you as soon as I can.

DO YOU KNOW ANYONE ELSE WHO IS THINKING OF BUYING OR SELLING A HOUSE OR WHO IS STRUGGLING TO SELL THEIR PROPERTY?

If so, again please forward this email to them or ask me to drop them a line.  I’ll be delighted to give what advice I can to help.

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