What Does Offers Over Asking Price Mean?
When looking for your dream home, you may have noticed that a lot of sellers provide an “offers over” price. This means that they will only consider offers above the price they set. The stated price tends to be below what the home is worth. This is to encourage potential buyers to make offers in the hopes that it will start a bidding war.
Buyers should calculate a budget and ensure that they have a maximum amount that they are willing to offer in case there is a bidding war.
In this guide, we’ll explain everything about what offers over asking price means. This allows you to make a fully informed decision with confidence.
Why Would a Seller Ask for Offers Over?
Sellers may ask for offers over for a variety of reasons. It could be due to the market or their own specific circumstance. Here are some of the main reasons why offers only is requested:
Market Conditions
The housing market may be in the seller’s favour and they will be expecting a lot of demand and offers. This means that a bidding war could potentially go well over the listed price. However, if there is little demand, the seller may find it difficult to find a buyer who is willing to meet the initial asking price.
No Rush to Sell
The seller may not be in a rush to sell, meaning that they can afford to wait until an offer comes in that they are happy to accept. By setting a low price point, they can wait to see how much over potential buyers are willing to offer. The sales price will also account for any fees whilst also ensuring that the seller still makes a profit.
Why Do People Offer Over the Asking Price?
There may be times when people offer over the asking price. While this may seem counterproductive for the buyer, here are the most common scenarios:
Quick Sale
The buyer may want a quick sale and make an offer that is made above the asking price. Accepting an offer sooner will encourage a quick and efficient sale.
Seller’s Market
The main reason why people offer over the asking price is that the local market may be in the seller’s favour. This means that there is an overwhelming demand but not enough houses on the market. This scenario is ideal for sellers as it will encourage a bidding war amongst buyers and can see properties sold for well above the listed price.
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When to Offer Lower
There are certain circumstances when buyers can offer less than the listed price. Here are the scenarios when buyers can offer less:
Quick Sale
If the seller wants a quick sale, they may accept a lower offer. The seller may have already purchased another property and needs to sell their current property fast in order to receive the funds. If this is the case, a lower offer is a good idea for buyers.
The Property Needs Work
There are times when you may feel justified in submitting a lower offer. This includes if you have viewed a property and believe that it needs extensive work that hasn’t been considered by the seller or estate agents. If this is the case, you should make it clear why you are submitting a lower offer.
Market Research
You should conduct thorough market research before submitting an offer. This includes looking at similar properties in the area to see how much they sold for. If the seller has overpriced their property, you can submit an offer that is closer to what you believe is a fair price.
Read more about What is a Cheeky Offer on a House?
When to Match the Offer
There are times when the initial listed price may be appealing to buyers. You may have conducted thorough research and determined that the listed price is fair. The property may require extensive work or you may develop an emotional attachment. Always make sure that you are not exceeding your budget.
If the property does require extensive work, make sure you consider the reparation costs on top of your offer. The seller may feel compelled to accept the offer if work is needed. However, you want to make sure that you take the reparation costs into consideration.
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What to Watch for When Making a High Offer
If you are considering putting in a higher offer, there are certain factors that you need to watch out for.
Budget
Firstly, you should always keep your budget in the back of your mind when making an offer. It can be easy to get swept up in the process and make a high offer, however, you need to make sure that you can afford the payment.
Gazumping
People put in higher offers to reduce the risk of being gazumped. Gazumping is when one buyer’s offer is accepted by the seller, only to have it dropped when another buyer makes a higher offer. This is more likely to happen if there is a lot of interest from multiple buyers. Again, make sure that you are not submitting an offer that exceeds your budget.
How to Make an Offer on a House
Now that you have decided that you want to make an offer on an offers over property, it’s important that you are prepared. Here is how you should come up with a fair and accurate offer:
Appraisal Contingency
Firstly, you should include an Appraisal Contingency in your contract when submitting your offer. You will need to have a home appraisal conducted before your application is approved. You would be expected to pay the difference if your appraisal is less than the seller's and they don't lower the asking price. If you can't pay the difference, you will have to withdraw from the sale at a cost.
Having an Appraisal Contingency in your contract means that you can withdraw from the sale without any financial penalty.
Property Market Conditions
You should always research the local and national property market. This will give you an idea of what price to expect as well as the demand. A general rule of thumb is that the higher the demand, the higher the price. When dealing with an offers over property, high demand could cause a bidding war amongst buyers.
Similar Properties
You should also look at similar properties in the area and see how much they sell for. Asking a local estate agent who knows the area well will also be helpful as they can give you valuable advice. You can use sites such as Rightmove and Zoopla to see if there are any other properties for sale in the area and use their price point as a comparison.
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Tips on Getting your Offer Accepted
There are ways that you can boost your chances of having your offer accepted. Here are some tips that you should consider:
Remember Your Budget
As mentioned previously, you always have to keep your budget in mind. You want to save as much money as possible while the seller is trying to make as much money. Therefore, making an offer that is fair but within your budget is more likely to be considered.
Talk to the Real Estate Agent
Talking to the estate agents who are dealing with the property will show that you are a keen and serious buyer. This can go a long way when they discuss offers with the seller.
Use Your Position
You can use your position as an advantage if you are a first-time buyer or cash buyer. This is because you are chain-free, meaning that the conveyancing process can start sooner and is less likely to run into obstacles.
Read more about Solicitors for First Time Buyers
What Does Offers Over Mean in Scotland?
Buying a property in Scotland is different from the rest of the UK. This is because their Home Report system provides buyers with access to important information on the property. This is crucial before proceeding with making an offer. Sellers must pay for a Home Report before putting their property on the market. The report will then be accessible for all potential buyers to read through.
If you wish to make an offer, your solicitor can then provide the seller’s estate agent with a Note of Interest. This will provide you with updates on the property such as when the seller will stop taking offers. You will also be informed whether your offer is accepted.
Read more on The Home Report: Sellers Survey in Scotland
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