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Home Reports - Its all a matter of price.
23Mar2009
Home Reports are now a part of daily life and one major effect they are having is on the pricing structure for houses that are coming on the market. Up until recently the traditional Scottish Offers Over system invited bids from potential purchasers and whilst the uplift was expected to be in the region of 10 – 15%, no upper limit was set and so in theory the seller tested the market right up to the closing date when offers were received.
The Home Report has a valuation as part of the pack and this sets the parameters for offers right from the start. However formal valuations tend to be conservative by nature and so should be treated as a guide even in a difficult market. The present market conditions favour the purchaser and experience is showing that regardless of whether a property is advertised with a price as ‘offers over’, ‘fixed’ or whatever, the purchaser will negotiate come what may.
Both these factors lead one to believe that the traditional Scottish pricing methods have had their day and a new method of pricing will evolve. A ‘Guide Price’ or ‘offers in the region of’ gives flexibility for negotiation and will fall more in line with the valuation contained in the Home Report. It would be appropriate to set a ‘Guide Price’ slightly above the valuation as the very nature of the pricing methodology must allow for offers both above and below the figure quoted. In a difficult market offers would more than likely come in below and vice versa in a stronger market.
However will the die hard traditionalists accept this change? It may be a challenge for them, but what is the point of trying to sell an ‘offers over’ property when the sale goes through at a price below. This does nothing for the client or agent as expectations are not realised and the interpretation of the market is proved to be false. Guide Prices offer a chance to correct this situation but above all it is vital to set the price at a realistic level that is in sympathy with the valuation figure in the Home Report. There is a strong whiff of the English disease creeping over the border but if it is kept in control and we avoid gazumping and gazundering at all costs, these changes should have a beneficial effect on the market. Although good, the Scottish system was not perfect and this is the main reason why Home Reports were introduced – let’s embrace the changes and provide the best possible service for our clients.
Just look at today’s property adverts and see how many properties no longer have an ‘offers over’ price. 12 months ago 100% would have been ‘offers over’.
The other hard fact of life in this difficult market is ‘price differential’; most sellers are also purchasers and it must be realised that if a low offer is received for a property, the seller has a golden opportunity to drive a hard bargain on their purchase. Providing the differential is within budget, the selling and purchase price almost become irrelevant. Whilst this is easy to say, many sellers find it hard to accept – the thought of their valuable investment being sold for a song is a difficult pill to swallow but they will be only too happy to snap up a bargain! This is human nature and it is the art of a good professional agent to steer their client through these troubled waters as kindly as possible. No Home Report or any other statute can possibly make the system perfect.
Martin Long
martin.long@bellingram.co.uk or 01463 717 799
Martin is a Director of Bell Ingram and a past Chairman of the Scottish branch of the NAEA