Anyone familiar with the recent pattern of the Edinburgh property market will be aware that competition among buyers has been intense throughout 2021.
When so many people are chasing a relatively scarce number of properties, an enduring question facing potential buyers is how much higher than the ‘offers over’ price should they bid to have a fighting chance of landing their dream home?
In offering advice to customers, one possible solution for us might be to review our sales data so far this year and work out an average of what we have achieved over and above the asking price.
The reality, however, is that this would be of little help, principally because of the wide variance around ‘offers over’ rates.
By opting for an average figure across the board, buyers would inevitably risk bidding too low or too high.
There is usually a combination of local market factors that can help you arrive at a more accurate figure.
The most obvious is the Home Report valuation, arrived at by the surveyor and based on the condition of the property and prevailing market trends.
This acts as a guide to the offers over price, which estate agents will normally advise sellers to pitch a little below the Home Report valuation to attract more potential buyers and open up competition.
In normal market conditions, the offers over price will be around £10,000 below the Home Report value, for lower to mid-priced properties.
In the current frenetic market however, due to demand outstripping supply, many potential buyers treat the Home Report value as a base figure.
Depending on the popularity of the area and other factors, including the quality of local state schools, bids can reach and, in some cases, exceed 20% over the Home Report value, although the average is less than that, of course.
This means that a family home, placed on the market for offers over £480,000 might eventually be sold for closer to £600,000 – or even more.
Another guide to arriving at a realistic bidding price, is to look at how long the property has been on the market and how many people are interested in it after that time. Normally, the first two or three weeks of a home going on sale are crucial and this is when it will attract most attention.
If several people note interest, which in Scotland they usually do through their solicitor, the estate agent will normally advise the seller to set a closing date, by which all bids must be in.
The longer a property spends on the market, the less likely it is to continue to attract competition among potential buyers and others may be lost as they find other homes.
A home that doesn’t go to a closing date within the first three weeks is unlikely to be one of those that will sell for 20% or more over the Home Report value.
Another reliable indicator of a home’s value will always be its location – particularly in a city such as Edinburgh which has enduringly popular areas where demand for homes never flags.
When deciding on your offer, your solicitor should be able to advise you on demand in the areas you’re interested in.
So, how much should you bid? There’s no straightforward response to this question, but you should think about all of these factors when discussing with your solicitor how much to offer and obtain bespoke advice for each property from.
You should not forget how important your own position is when judging what to bid. If you are not under any great pressure to move immediately, and you’re looking in a neighbourhood where homes frequently come onto the market, you can adopt a more cautious bidding strategy.
If you have to move quickly however, to start a new job or in time for the new school year, you may have to be a little more aggressive in your approach and make moderately higher bids than you might otherwise do.
For more information on selling your home please call Purdie & Co on 0131 346 7240 or visit www.purdiesolicitors.co.uk