It's all over for the offers-over system, say estate agents

Published on Wednesday 19 November 2008 21:14

ONE of the central principles of the Scottish property market – the "offers-over" price – will die out with the introduction of next month's Home Reports, estate agents said yesterday.

It is predicted that, instead, properties will be marketed at "offers around", bringing them into line with the system in England where bids are encouraged just over or under the advertised price.

Under the new legislation every home put on the market from 1 December will have to have documentation including a full surveyor's report and an estimation of the home's value.

Scott Brown of Warners believes that buyers seeing the valuation figure in black and white will be less likely to consider offering over the asking price.

"If the Home Report estimates your house is worth 300,000, you are unlikely to get anyone paying significantly over that figure, regardless of the offers- over price you set," he said.

In the past, those wanting to be clear about an acceptable bid would have used a fixed price, but Mr Brown says that the advantage of an "offers around" system is that it allows competition among buyers to drive up the price. "The final selling figure for a property could still rise above its valuation if there is enough interest to spark a bidding war."

Warners has already started listing properties at "offers around" and Mr Brown says he will now be recommending the option to more sellers. "After all, if buyers are going to know how much the property is worth in advance, there's no point in setting a price that is well below that value," he said.

Leslie Deans, an estate agent and solicitor, suspects that the "offers around" system's popularity will be short lived. "At the moment 75 per cent of our properties for sale are on at a fixed price and I can see that some owners might prefer an 'offers around' price if that became established and understood. But in a stronger market, the 'offers over' price has always worked very well for sellers."

Mr Deans believes that, like a fixed price, an offers-around price will limit the amount buyers are encouraged to bid. "The marketing tool of setting a low offers-over price, to create some competition will still work in a buoyant market and there are a lot of sellers who will want to make clear the minimum level of the offers expected."

Richard Loudon, of Simpson & Marwick, says that offers-over still has advantages. "The most sought-after properties, those with a value that is indefinable by a surveyor, will still be priced at offers-over."

He believes this price might be pitched much nearer the valuation figure, however. "I think the days of very low starting prices are gone, but for something with a real scarcity premium, an offers-over price will remain the best way of getting the optimum amount."