Why you should consider buying a fixed price property
If you’re planning to purchase a property in the near future, you might already be thinking about the ‘offers over’ system, and how to make it work for your finances.
The ‘offers over' system is commonplace in the Scottish property market, and in a nutshell, it refers to properties marketed at a price, with bidders invited to make offers above that figure. The figure is usually set around the property’s Home Report value, and properties generally sell for around 3% to 5% above that figure – although depending on the property’s condition, size and location, it could sell for as much as 20% above, and sometimes even more.
Be sure to check out ESPC’s latest House Price Report for the most accurate and up-to-date information on property selling prices and bidding trends.
As you may already know, whatever you bid above the property’s Home Report value cannot be included in the sum loaned to you by your mortgage lender – it must be paid by your own finances, much like your deposit. This means that you need to be very careful when considering bids over a property’s valuation, as you need to be sure that you have the funds to pay this amount in full, plus your mortgage deposit and other costs.
For example, if you’re interested in a property marketed at offers over £195,000, with a Home Report value of £200,000, you could be bidding £210,000 to secure it (5% over the value). This means that with a 10% mortgage deposit, you’d need to have £30,000 of your own money available to purchase the property, plus the funds for legal fees, LBTT and removals cost. No wonder that ‘offers over’ is sometimes known as ‘the double deposit’!
But there is a way around this often-expensive part of purchasing a property: the fixed price property.
Read on to discover all the reasons why you should consider purchasing a fixed price property for your next home.
What is a fixed price property?
A fixed price property is a property listed for a set price, without inviting bids over that figure. The fixed price is generally set at, or sometimes just under, the property’s Home Report valuation, which means that you don’t need to find the funds to bid over the valuation. This, in turn, means that you can spend more of your own money on the mortgage deposit, which can improve the interest rates offered to you by your lender, reducing your monthly repayments.
So, if we return to our example: a property is listed for a fixed price of £200,000, and the Home Report value is also £200,000. This means that you could take your £10,000 that you would have spent on the offer over the valuation, and apply it to your mortgage deposit instead, meaning you have a 15% deposit instead of a 10% deposit.
How many fixed price properties are on the market?
The volume of fixed price properties for sale across Edinburgh, the Lothians, Fife and the Borders has risen 29% annually, according to our latest House Price Report, which is great news for first-time buyers and those looking to find a home quickly.
As of October 2023, there are more than 570 properties listed on espc.com for a fixed price.
Why are homes listed for a fixed price?
Properties can be listed for a fixed price for a variety of reasons, but the most common reason is that the sellers are looking for a quick sale. Fixed price properties mean that a buyer can make their offer and the property is immediately under offer, rather than arranging multiple viewings, before setting a closing date. Fixed price properties can also be more attractive to savvy buyers, who know that they might be able to get a bargain if they act quickly.
Properties can be listed for offers over, and then later moved to a fixed price if the home isn’t selling as quickly as the owners had hoped – so if there’s a property that’s caught your eye, don’t lose sight of it, as its circumstances may change. Storing it in your Watchlist using your My ESPC account can help you track any changes such as this.
Sometimes, properties are listed for a fixed price because they require some renovation works or refurbishments. The sellers understand that lots of money may need to be spent on the property, so they stand a better chance of sale by listing it for a set price, making it more attractive to buyers on a budget.
Why should you buy a fixed price property?
In conclusion, a fixed price property works brilliantly for buyers and for sellers, so don’t look at a fixed price listing as a negative thing.
For buyers, the fixed price means you can spend more of your own money on the mortgage deposit, reducing your repayments.
For sellers, it means you know exactly the figure you’ll be working with when looking for your next home, which makes your onward search easier, as you already know your budget.
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With a wealth of local property knowledge, ESPC solicitor estate agents make the home buying and selling processes as easy as possible. If you’re looking to buy or sell a house or flat, find an ESPC solicitor agent today.