Delaney Graham is a firm of solicitors based in Glasgow. Between our partners, we have over 28 years experience dealing with property in Scotland. Our contact details can be found at the end of this article.
Offering and buying a house is an exhilarating experience. It’s also one of the major milestones in our lives and quite probably the biggest financial transaction most of us will ever be involved in. Offering and having your offer accepted is one of those exciting moments that signals a new chapter is just beginning – your new house, just waiting for you to put your mark on it and call it your home.
Sounds great, yes? So how’s it all done? If you’re a first-time buyer then you’ll hopefully find this guide extremely helpful, and if you’ve already purchased once or a few times before, read on as you’ll still likely pick up some hints and tips. We’ve been doing this for years and years and have experience in the market, how it works and how to maximise your chances of securing your home.
Let’s go through the process generally and then we’ll look at what you need to do.
In the beginning
It normally starts when you’ve made that decision to move home and have maybe viewed a property or two. You’ll most likely have an idea of the area you’d like to buy in and a rough idea of your budget. Buying a house is of course linked to what you can afford, with the majority of buyers needing a mortgage (a loan that is secured against the property) to fund the purchase.
When it comes to viewing property, you should look at the many well known online portals as well as keeping an eye on what local estate agents are marketing. Not all estate agents market their properties on the same websites, so make sure you look around. We would suggest looking at the properties in your price range, in the area you like and make a shortlist of possibilities. There’s nothing wrong with keeping your options open and you might find that a property you didn’t like the look of on paper is actually much more suited to you when you view it.
As a general rule, always, always view a property in person. And we know that this sounds like an obvious piece of advice, but you’d be surprised… You can’t get a feel for a property until you have a good look around, and the estate agent may well takes your interest less seriously than other prospective buyers if you don’t take time to view the property.
When viewing a property always make sure you ask questions too. There’s nothing to stop you having informal discussions with the seller directly, but in Scotland the agreement to buy property needs to be in writing. Some people don’t like to speak to the seller directly and prefer to leave it to their solicitor to negotiate instead. Either way is fine, depending on what you are comfortable with.
Finance and equity
You should make sure that your finance is in order, either through a bank or building society, or through a regulated financial adviser. Ideally, if you require a mortgage you should have it arranged in principle so you know what your budget is. This is important as having your finance in place may affect the terms of your offer, which we’ll discuss in further detail below.
Also, the situation may arise that you have a property to sell before you can buy, as you require the equity from your current property to fund the next one. You may have heard this type of situation being described as a “chain” where there are multiple buyers and sellers all involved in a chain of transactions all being dependent on sales to fund the purchases. Again, having a property to sell ahead of your purchase may affect the terms of your offer.
Ready to offer
So let’s assume you’ve found the right property, what do you do next? Walk into the estate agent’s office and go straight to offer? Probably not, unless you’re an extremely experienced buyer and the estate agent knows you’re a serious proposition.
In the vast majority of cases, the estate agent will insist that you contact a solicitor to “note interest”. And what is all of this noting interest about? Well, this where you instruct a solicitor and ask them to contact the estate agent on your behalf to formally note your interest in the property, signalling that you are likely to make an offer. Don’t worry about this part as noting interest isn’t binding in any way and you are free to change your mind at any point. Your solicitor should also enquire as to the seller’s position – are they looking to consider offers at this stage or do they want the property to remain on the market a little bit longer to see if they can attract further interest? This will be affected by factors such as how long the property has been on the market or how popular the area and property is.
This does of course mean that you’ll need to instruct a solicitor to do this though. Bear in mind that some solicitors will charge a fee to note interest and make an offer on your behalf and some may not. Our opinion is that we would rather form lasting and better relationships with our clients than find an excuse to charge at every point in the proceedings, but each to their own.
Anyway, your solicitor should report back to you after speaking to the estate agent and let you know whether the seller is looking to receive an offer or wants to hold off a little longer. If the seller isn’t overly enthusiastic about receiving an early offer then think carefully – if you offer anyway you may end up showing your hand early and putting yourself at a disadvantage later on. This can be slightly further complicated by the possibility that another person may also have noted interest in the exact same property as you – outrageous! In reality of course, with desirable properties this is often the case and you should expect competition for certain properties.
Where there are multiple notes of interest the usual procedure is for the estate agent to set what is known as a “closing date” where a day and time is specified for all interested parties to submit formal offers. In this case, you will be up against other interested parties when your solicitor makes an offer on your behalf. The seller will look at all of the offers and often the highest price offered is accepted, but this is not always the case. Be aware that some sellers prefer to sell to the buyer who looks most likely to complete the contract within the timescale agreed, particularly if the prices offered are not too far apart. For example, if you have a property still to sell or finance still to arrange, a seller may view this as being potentially problematic.
Quite a bit of information there, so let’s recap. The most likely situations when it comes to offering are:
- The seller is happy to consider an offer;
- The seller wants to wait a little before considering an offer; and
- The seller has lots of interested buyers and puts the property to a closing date.
Making an offer
For now, let’s just assume we can make an offer – finally! The offer forms the first part of the contract. If you are ready to offer then you are ready to commit to a binding contract to purchase the property from the seller, who will be equally bound to sell to you upon agreement (also known as conclusion) of the contract. These contractual letters are called “missives” and you’ll hear your solicitor talk to you about them as you proceed.
Important point – making offers in Scotland is an entirely different process to the rest of the UK. It needs to be in writing and signed properly or it doesn’t count. So what do you need to do? Not very much is the answer. Your solicitor will draft and sign an offer for you based on your instructions and submit it to the estate agent, often by fax – yes, they still exist. All you need to do is simply instruct on the price, the date you’d like for entry, include any pieces of furniture (often referred to as moveables) that particularly caught your eye, and let your solicitor know if there are any caveats to be inserted.
What’s in the offer?
Let’s look at these instructions one at a time.
The age old question – what is it worth? Hmm, there are lots of schools of thought on this one. Generally, the value these days is dictated by the value attributed by a qualified surveyor who puts this information into something called a Home Report. This report will be provided to you by the estate agent on behalf of the seller and contains the surveyor’s report on the property, including the surveyor’s recommended valuation. The surveyor’s valuation is usually based on like for like property sales of similar properties in the area. The property valuation can go up or down dependent on the condition of the property and the addition of alterations such as extensions.
The estate agent will often peg the price of the property as a reflection of the surveyor’s valuation in the Home Report. The price itself will be couched in terms of “offers over”, “fixed price” or more unusually in Scotland, “offers around or in the region of”.
Offers over reflects the situation where a seller is fairly confident that their property will achieve a price of at least the valuation in the Home Report (believe us, they’re secretly hoping for more) and they will only consider offers over a certain price. This is the most common pricing structure where there is a closing date and multiple parties are bidding on the property.
Fixed price properties are usually where the seller wants a quick offer agreed or where a prior, offers over property, didn’t quite make it to the sale the seller was hoping for. As the name suggests, the seller has simply named the price that they are looking for, which depending on the situation, may still be up for negotiation.
Offers around or in the region of is a little less cast in stone and less common, probably because nobody really knows what it means. Is the seller saying they are looking for a bit more, will settle for a bit less or just looking to sell for the valuation? It probably depends on the seller, so there’s a bit of guesswork with this one.
Also consider your budget, how much can you afford or are willing to spend? If you are using a mortgage to complete the purchase, the mortgage lender will almost always only lend you a percentage of the surveyor’s valuation – not the agreed purchase price. This means that if you want to offer above the valuation then you’ll usually need to fund the difference personally. Before 2008 this wasn’t always the case, but we all know what happened there…
So, the price you offer is based on all of the above. Easy, right?
2. Date of Entry
Always on a weekday and for some reason the majority of these appear to be on Fridays on the last two weeks of the month. You just choose this and the seller will either agree or come back with an alternate date. This goes on until an agreement is made. The date of entry will commonly be between four to eight weeks from the date of the offer, to allow the contract to be agreed, enquiries made, mortgage instructions issued and any associated property sale to be completed.
These are generally items within the property that are not physically attached to it. For example, you may like a particular set of free standing wardrobes or removable light fitting. If in doubt, ask your solicitor to include it in the offer if it something you want included in the price to be paid. It is better to be clear than leave room for confusion later on.
Offers made on property in Scotland should be made in good faith. This means that if your offer is dependent on you receiving finance or selling another property, the offer should state that it is subject to these conditions being fulfilled. It is also often the case that the offer will be made subject to sight of the Home Report or the mortgage lender being satisfied with the survey contained in the Home Report. Warning! Your mortgage lender may not accept the Home Report’s stated valuation and may want to instruct its own surveyor to assess this.
5. Near the end now
As soon as you can instruct your solicitor in these areas, your offer can be submitted to the estate agent. One important thing to remember is that you can only submit one offer at a time, unless you can and intend to buy more than one property at a time, as your offer needs to be made in good faith with you being capable of following through with the purchase.
We hope that you have found this article helpful. Please contact us if we can be of service to you in offering for your next property! As we said at the beginning, we have years of experience in this area and don’t charge our clients for this part of our service.
If you’d like more information on this subject or our assistance with a property matter, you can call us directly on 0141 483 4450 or contact us through our website www.delaneygraham.co.uk.