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Written by rosalind renshaw

The traditional ‘offers over’ pricing system of the Scottish housing market has bitten the dust.

According to Scotland on Sunday newspaper, which has just published its annual Scottish house price guide, ‘offers around’ has become more prevalent, and many houses marketed at a fixed price are in fact selling at below the asking price.

The paper says that Scots property agents believe prices across the country are now at a more ‘realistic’ level because of a combination of the recession and the introduction of Home Reports – Scotland’s version of Home Information Packs, but which contain a surveyor’s valuation.


The paper notes that the Home Report valuations mean buyers are reluctant to pay over the odds. 

The Edinburgh Solicitors’ Property Centre (ESPC) has reported that over the past three months 75% of homes on the market for a fixed price sold for less.

The shift is a wholesale change in the Scottish property market, where ‘offers over ‘ meant precisely that and where until three years ago, buyers regularly paid premiums of up to 30%.

ESPC business analyst David Marshall said: “Conditions remain challenging for sellers, and those that are achieving sales are having to show some flexibility in negotiations. ‘Offers around’ and ‘in the region of’ are increasingly popular.

“I suspect we will not go back to premiums being paid of 25% over on the ‘offers over’ properties.”

Janice McIvor, manager of Countrywide-owned Slater Hogg & Howison’s Stirling branch, said: “The boom is over. Properties that were worth £900,000 are now worth £750,000.”

Comments

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    Offers Over is still around and will probably stay around for the foreseeable future in Scotland. Whilst you have buyers that have surplus cash over and above the value of a property, this will still be attractive to a vendor.
    The Home Reports (HR) are a complete waste of money and were only introduced to save people money when buying a property. The only winners are the Surveyors! All surveyors are now running scared in Scotland as they are increasingly getting struck off lenders panels for overvaluing properties. The increase in PI premiums alone have caused certain surveyor companies to close down.
    I have sold numerous properties this year at well above market value, I have however also sold below value. What we need to remember I that these news/stories are pointless due to the market being different dependent upon the region/city/town/village you live in.
    We are based in Edinburgh and the market is in my opinion very reasonably strong and looks like we have turned the corner?

    • 18 April 2011 15:05 PM
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    Anna Key: Not wanting to disagree with you completely - you being a fellow northerner and all - however overvaluing is far from restricted to the nationals in my experience. Yes, they have unrealistic targets set for them by those who sometimes have never even set foot in a property to appraise one, but as you later said there are good and bad - and this absolutely sound rule applies whether they are working for themselves; for an owner (who will be one or the other themselves...); or for the benefit of a million shareholders.

    At the risk of being seen as agreeing with Mr Hendry (and OMG will he have a field day...), overvaluing benefits nobody; costs Agents MILLIONS a year in wasted effort and abortive costs; and leaves properties o shelves that may otherwise sell. HOWEVER (and this is where we DISAGREE, Mr Hendry - hard cheese...), that is the choice of either the Agent who advises prices that will only be reached by starships; or vendors who believe buyers are foolish enough to pay an unrealistic price.

    These prices simply act to separate the real figures from the unreal - as they always have... and, no doubt, always will.

    • 17 April 2011 09:51 AM
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    Will Hicks

    No, it's not the blind leading the blind. A good EA knows their market and the demand. What someone is prepared to pay is the only real test.
    Sometimes the property is quirky and you have to try a little higher to be fair to the vendor. I always ask myself, if I had for instance £600K for a 4 bed house, would I think this is worth it? If it's quirky and without comparables, and we go too low, we'll soon know as that now rare occurrence, the sealed and final bids, will come into play.

    It is is no-one's interest to achieve a sale at a vastly exaggerated price. There are ten weeks between sale agreed and exchange and the last thing we want to do is lose a buyer because they look around and see they have been rash with their offer. It's heartbreaking for everyone when a chain collapses.

    The main problem facing realistic EAs is the ridiculous overpricing that takes place by Corporate employees worried about losing their jobs if they don't win the instruction. They lock the vendor in for 12-26 weeks and then batter down the price. They aren't 'blind', they know exactly what they are doing.

    The vendor then thinks he has lost £70K, £70K that never existed in the first place.

    There are some rogues in EA but there are some damned good ones too.

    • 16 April 2011 11:25 AM
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    Anna,

    I'm aware surveyors rely on local EAs for current asking prices; blind leading the blind then ? What if there's no direct "comparables" I'm sure they will have to come up with a number themselves at some point. I've met a few RICS guys in my time, as they usually say there's a 10-15% up/down tolerance on their valuations.

    All academic really, as a property is only "worth" what somebody will pay for it.

    • 15 April 2011 13:44 PM
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    Will Hicks

    "This in tern allows the EA to do what they are good at i.e. selling houses, not valuing them"

    Well you would think so but this is how most valuations by surveyors go:

    " Hello, it's John Smith fro SuperSurveyors. Please can you help me. I'm looking at a property on Stone lane and I see you have sold 6 similar properties nearby in the last 6 months. Can you tell me what they went for? Really? How many bedrooms, bathrooms, parking? What state of repair were they in? Oh right, thank you Mrs EA that's been really helpful"

    • 15 April 2011 13:01 PM
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    Having sold in the Scottish market recently [using a Home Report, NOT called HIP in Scotland], I can say, even though the Home Report cost me a few hundred quid, it is a great idea, as it contains a local RICS valuation, so everybody knows where they are on price and buyers save on valuation fees. In today's thin market, this prevents a lot of messing around i.e. prevents no daft asking prices, whether driven by EA over-valuation [to win business], or vendor [unrealistic] expectation. This allows the vendor to chose an EA [EA/solicitor in Scotland] based on cost and level of service. This in tern allows the EA to do what they are good at i.e. selling houses, not valuing them.

    Regarding the article, the bit about ...
    "the traditional ‘offers over’ pricing system of the Scottish housing market has bitten the dust." ... is not quite right [as are most press articles about the housing market]. The reason they can say this at the moment is that a lot of properties are only getting 1 interested buyer, so the blind bid system doesn't get invoked. Buyers in Scotland are generally more cautious, as offers are legally binding.

    • 15 April 2011 09:49 AM
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    I have a question or two:

    Firstly, how did the Home Pack affect actual ASKING prices when it became Law? Were they adjusted upward to reflect the actual anticipated SELLING price, or did they still reflect the old 'Offers Over' ways...?

    Secondly, as a 'valuation' is provided up-front with the marketing material, are properties now selling FOR the valuation figure; BELOW it, or ABOVE?

    Thirdly, what does a 'Fixed Price', or an 'OiRo' price now reflect, in direct relation to the Home Pack 'valuation' figure?

    Perhaps 'Agent Orange' would care to comment? I seem to remember he/she is active over the border.

    Certainly, those who walk in the moccasins need to be commenting here... Otherwise, the story is meaningless.

    • 15 April 2011 09:48 AM
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