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It’s a term that you may well have seen or read a lot if you’re looking to buy or sell your property. But what exactly does ‘under offer’ mean? Does it always translate to a property being off the market? And does it mean the same as ‘sale agreed?’
Time to find out and separate fact from fiction.
The expression ‘under offer’ is generally understood as meaning that a buyer has made an offer on a property and the seller is considering the offer but has currently neither accepted nor declined.
This could be because the offer submitted by the potential buyer is lower than the seller was expecting, but it hasn’t been instantly dismissed.
Some estate agents will use ‘under offer’ in place of ‘sold subject to contract’. Technically, ‘sold STC’ should only be used when the seller has accepted an offer on the property, but the paperwork is yet to be completed.
Using ‘under offer’ makes it appear that the property is still available; unlike ‘sold STC’ which sounds somewhat more final. However, declaring that a property is still under offer is a tactic that is used by some agents to encourage other interested parties to act quickly; whether that’s arranging a property viewing or going ahead to make a higher offer.
For a seller, ‘under offer’ means an offer has been made for the house and they have either accepted it, declined it, or are still considering it. When a house is under offer, the seller does not need to take it off the market just yet and they can still allow others to view and make an offer for their property.
When a property is under offer, there’s an onus on the buyer to get things moving to get their offer accepted so that the property is labelled as ‘sold STC’ and to make sure they are not gazumped by another buyer that makes a more attractive offer.
We say ‘more attractive’ offer because it doesn’t necessarily mean a higher offer. Let’s assume, for example, that a seller and receives two offers.
In this situation, offer B is more attractive because the sale will progress quickly and so the buyer making offer B could well gazump the buyer that made offer A.
The example above shows a situation when a seller may accept a lower offer. An asking price is not set in stone and if you feel that the property is worth less than what the seller is asking, go in with a lower offer; although it’s important to be reasonable.
Yes, there are. Offers in excess of (OIEO) sets a minimum price and encourages buyers to bid upwards. Sellers typically set OIEO prices lower than the actual figure they want. The idea is to use a lower price to encourage buyers to view it and see what the property has to offer. OIEO sets the bottom bar so that buyers know a seller is unlikely to accept a lower offer.
Meanwhile, putting a guide price means that the price is very much open to interpretation. For example, a property valued at £190,000 could be put on the market with a guide price of £185,000 to £200,000. This sets a ceiling price, so buyers are highly unlikely to go above this figure. Buyers will see a guide price as just that; a guide. They often believe a guide price indicates a sellers’ willingness to negotiate and take less than the amount shown. As a result, they are likely to negotiate to less than they would offer on an asking price.
Marking a property as POA (price on application) forces interested buyers to contact the agent, but this can discourage buyers that don’t want the hassle of a conversation.
A sale by tender is like a silent auction. Interested buyers put in a bid and the seller will consider all of them on the same day. It’s mostly used on properties with a huge amount of interest. The seller usually pays a small fee to the estate agent and each buyer has to pay an introduction fee to put in a bid.
Similar to a sale by tender is a sealed bid that generally uses the same set-up but does not have an introduction fee. Buyers will view the property and have time to think what it’s worth to them. They will submit a sealed bid and, on a given day, the seller will review them all and pick one. Like tender offers, sealed bids are generally used on properties where demand massively exceeds supply, across all price ranges.
There’s no way to guarantee your offer is accepted, but there are two things you can do to make your offer stand out from the crowd.
First is to make clear if you’re a first-time buyer or you’re chain-free because potentially, you’ll be in a better position than other buyers that are in a chain. Secondly is to act swiftly. Doing so will show the seller that you’re a serious buyer.
If your offer has been refused, there are only really two options available:
A lot will depend upon your budget and how much you really want the property. If you want to make another offer, it’s worth speaking with the agent to find out why the offer was rejected. It could be due to your position as a buyer rather than the financial offer you made.
Whilst it is legally possible for a buyer to reduce their offer it’s frowned upon and is called ‘gazundering’. The only justifiable reason for lowering an offer is if a survey has revealed an undeclared or unknown problem.
Estate agents are not legally allowed to tell you the exact amount of another offer that has been made on a property. However, they can give you an idea of how close those offers might have been to the asking price so that the property moves from ‘under offer’ to ‘sold STC’.
As we mentioned before, the main difference between these two terms is that ‘under offer’ means a seller is considering an offer they’ve received from a buyer. Sold STC means that the seller has accepted an offer from a buyer and the property will be sold to this person after contracts have been signed and exchanged.
Actually, neither of these phrases means that the property has sold. That’s because the home will remain in the seller’s name right up until the exchange of contracts.
As we touched on previously, when a property is under offer, the seller can still allow people to view the property.
In fact, as a seller, you can still allow people to view the property right up until exchange. Until this point there’s no legal obligation for either party. However, it may sour your relationship with your original buyer if you gazump them by accepting a more attractive offer.
No, it’s not. Things are different in Scotland because when an offer has been made, it’s legally binding to prevent the frustration caused by offers being made then withdrawn.
In Scotland, a prospective buyer must first instruct their solicitor to provide a “note of interest” to the seller. This will indicate that there is interest in the property and means the buyer will be made aware of important aspects of the sale, such as when the seller is accepting offers and the closing date for making an offer.
Many conveyancers in Scotland are ‘Solicitor Estate Agents’ and they are bound by the Law Society of Scotland’s guidelines that are designed to discourage gazumping. When a conveyancer has accepted an offer on the property on behalf of the seller, they cannot accept a subsequent offer from another potential buyer.
However, if the seller does want to accept a second offer, the solicitor must withdraw from acting on their behalf and the seller needs to then hire another conveyancer for their sale.
Instead of ‘sold STC’, a property in Scotland would be sold ‘subject to conclusion of missives’. Missives are a series of letters between the buyers’ and sellers’ solicitors that include the terms of the sale. Completion of this stage is known as the ‘conclusion of missives’ and from this point onwards, the sale is legally binding.
This is one of those ‘how long is a piece of string?’ questions. There are loads of variables and all sorts of factors that can delay the process. Research from the HomeOwners Alliance shows that it takes an average of 60 days to sell a house.
Avoiding being in a chain is a sure-fire way to make the whole under offer to completion process go quicker. There’s two ways this could happen:
When you choose option two, you’ll be choosing an alternative to the whole ‘under offer’ saga. That’s because a cash buyer will work with motivated sellers to push through a fast sale. Their job is to buy properties that are either difficult to sell or whose owners need cash in their bank account very quickly.
To achieve these super-fast sales, you as a seller will have to take a hit on your price. Cash buyers typically offer around 80% of the current market rate. If you’re considering a cash buyer, you must be aware of two critical points.
There’s little regulation in this industry so it’s a haven for scammers, pirates, cowboys and other ne’er-do-well individuals. Anyone can set up a business and say they’re a cash buyer. However, that doesn’t mean they have cash or that they’re competent. It’s up to you to do your due diligence and check where their money comes from, what experience they have, the price they offer and everything else.
Secondly, cash buyers are a business and like any business, their aim is to make a profit. Some cash buyers are sniffing around for what they call ‘the three D’s’; these being divorce, death and debt. These three situations generate the most emotion, making sellers more desperate and weaker in negotiations.
It is possible to sell a property in just 30 days if you use a cash buyer. As they’ll often be using their own money, no time is wasted sorting out mortgages and they won’t be in a chain.
Here’s a quick step-by-step guide for you, although please do remember that some companies will operate differently. Here’s a rough template that most will follow:
A reputable cash buyer can be a life saver though in a tough situation and, as long as you have done your due diligence to fully understand the company with which you’re dealing, a cash buyer can produce great results for you and get your house not only ‘under offer’ but ‘sold STC’ in a short timeframe.
For your own security, check that the company is a member of the National Association of Property Buyers (NAPB) and The Property Ombudsman. This will give you independent help if there’s a dispute and also means that they have to abide by a code of conduct.
Get everything in writing, for extra peace of mind. This way, you can recheck any details and you’ll have evidence of the price that was offered to you for your property. And on that topic, make sure that the offer they give you for your property is fixed. It’s not uncommon for some less scrupulous companies to reduce their offer at the last minute, leaving you with little choice but to accept.
We hope you’ve found this article to be informative and helpful and explained to you the term ‘under offer’ as well as point out the difference between ‘under offer’ and ‘sold STC’. To get your free, no-obligation offer for a fast house sale, call us, or send an email.