Thinking of moving home or simply buying an additional property? It’s fair to say that the market is a “seller’s market” these days. Properties in Ayrshire are routinely going for well over asking prices and well over Home Report values. There is a relative shortage of stock (properties) available and fierce competition for those which are so how do you determine what price to offer and whether there is ‘good value’ in that offer price?

Most properties these days are going to a closing date. This is when the estate agents, under their client’s instructions, fix a date and time for written offers to be received for a sale property. Any offerors are required to submit written offers via their solicitor.

This is where we come in.

Closing dates by their very nature create increase competition, at least in terms of price. There is no negotiation involved and predominantly the highest bidder wins. The conditions contained in any written offer are of course relevant, a cash offer is always preferrable to an offer subject to mortgage or sale of another property but ultimately, price will be the determining factor. With no way of truly second-guessing what others may be offering the temptation is to go as high as you can. Indeed, we have had instances of properties selling at more than £100,000 above the asking price such is the competition in the market.

Bidding for property at such levels above asking price and Home Report value has immediate implications. Affordability is one thing, if you require a mortgage, lenders will only provide loan funds in relation to the Home Report value of the property, not the final price. Any difference between price and Home Report is your responsibility, not the lenders. Also, if bidding at above Home Report value will the property’s value appreciate in future, and will you get this money (investment?) back?

This brings us back to the question of value.

The example above of successful clients bidding £100,000 above asking price is not unique but it’s not every property that sells so well. However, almost all properties are selling above Home Report value. The Home Report is prepared by an independent survey who considers the current market conditions and the sale prices of other local properties. Bidding well above Home Report value is unlikely to see that sale price realised a few years down the line.

So, if large bids due to increased competition are required to secure a property at present but the value of that price may not be returned where can value for that price be found? Well, value isn’t only found in the price you pay and subsequently receive. Not all property purchases are in effect monetary investments.

Many people are looking for family homes or that one property where they will be content and happy to live in for years to come. This is where value can come in a large investment. The return, or value, comes from the lived experience in the property. Raising your family or truly settling down can give satisfaction of that large financial outlay in ways that a financial return cannot and should be considered along with or against the initial financial outlay.

If you are thinking of offering on a property talk to one of our conveyancing solicitors based in our Ayr office who will be happy to go through all aspects of your proposed offer and potential transaction with you.