How much to offer over the asking price?

Broglie

Hi,

I am from Aberdeen, Scotland and I have been following local housing market closely since last few months.

I have noticed that houses are sold for upto 15 to 20% over the asking price.

One Flat - 2 bedroom was on market for price over £173,000 and it was sold at £200,000.
Similarly a house on the market for £400,000 was sold at £445,000 and there are other similar sales where the sale price is in the range of 15% at-least over the asking price.

Aberdeen is already an expensive market due to Oil and Gas industries and this is already accounted in the valuation price or asking price.

We would like to buy a house but are worried that we will end up paying a lot. Is this trend similar in other parts of UK?

Should we wait some more time for the market to settle down?

Is there a general norm when making offers over the asking price? How far to stretch?

Thanks
Broglie

bryanb

Scotland is vastly different from England in this respect. In England it's usual to offer about 10% less than asking initially.
London is different again.

Broglie

bryanb wrote: »

Scotland is vastly different from England in this respect. In England it's usual to offer about 10% less than asking initially.
London is different again.

Thanks Bryan. Agree, its very different in Scotland.

Another challenge is when someone is paying 15% over the asking price means more they have to pay more as stamp duty as well.

somethingcorporate

Both the examples you have given are 10% over asking so perhaps that is a more realistic benchmark than the 15-20% you have suggested.

If that's the case then I guess you'll need to be prepared to pay that amount on top of the asking. And yes, it has the impact on Stamp Duty too!

Pixie5740

Look at home much building work is going on in Aberdeen. Not just houses but offices for oil companies and service suppliers too. There are so many new projects on the go to explore new fields that I don't expect the market to cool down in Aberdeen any time soon. Then again my prediction is probably about as accurate as shaking a magic 8 ball.

It's not an "asking price" that property is advertised at, it's "offers over." One way of getting round the offers over process would be to buy a new build for a fixed price.

beecher2

Are they selling over the home report valuation? We sold last year for 10% over asking price, but just marginally over valuation.

bris

In Scotland the "offers over" is designed to generate interest in a property.

If I want £200k for my house I would put it on at offers over 180k to generate interest and get people looking.

Like any other property you have to really ignore the OO price and have a valuation to see what the property is really worth then decide from there what your offer is going to be.

Not sure we are really back in the boom days of offering 20-30% more than the house is worth so unless you have way over the required deposit it may be a mute point anyway as banks are trying to keep a grip on the lending, no more 120% mortgages that helped to put us in this position in the first place.

There may very well be a few elite areas left but they will be rare, offer what its worth and ignore the OO price.

Broglie

Thanks every one. Even 10% over the asking price or should i say valuation price seems to me a lot. This is because i believe the Aberdeen market is already quite high and i am sure the valuation would have considered the growth in general housing market.

Pixie5740

The valuation is based on what other similar properties in the area have sold for recently.

It's supply and demand. There are lots of new people moving to Aberdeen which is quite a small city so demand is growing faster than supply.

bmunky7

this is one of the draw backs of the Scottish system unfortunately, and it seems to be spreading to England more and more. You have less chance of being gazumped / gazundered as there is an earlier binding contract in place but there is less transparency over the expected value the seller wants.

It sounds like you've already done your research and c10% over asking is the answer. It is unfortunate if you are the only bidder but that sounds unlikely and in any case if that's what you are willing to pay then that's what its worth!

Good luck!

phoebe1989seb

I have no experience of the market in Scotland, but I do agree that this is spreading to certain parts of England. DS (who at 24 is fortunate enough to be mortgage-free thanks to inheritances ) is looking to buy in Brighton having sold a flat in SW London in excess of the asking price within a week of marketing and is struggling to get an offer accepted as everything is going for 10% or more than the asking prices......

One flat he and GF looked at a few weeks back went under offer straight after the open day (which are commonplace in Brighton) and has now come back on at £14k more than previous AP.

When he told the EA yesterday that he wanted to make an (asking price) offer - reminding him of their excellent position, 8 weeks down the line with their sale and no mortgage required - he was told he'd have to wait till after the blocked viewings planned for Thursday and that they are competing with many other actual cash buyers

Many flats there are also going to tender which involves paying an additional fee, often 2% :mad:

I don't envy you OP.....but wish you luck!