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Last Updated: Wednesday, 22 November 2006, 12:49 GMT
Scots house offers over the odds?
By Alex Robertson
BBC Scotland

For sale signs in Glasgow
The housing market remains buoyant according to recent figures
The merits of Scotland's housing market are a matter of perspective.

To the seller the "offers over" system allows homeowners to engender competition and gain the highest price possible.

But buyers face a blind auction if a property goes to a closing date. The prospect of losing out, and money spent on a survey, is real.

All are in agreement the strength of the market lies in a quick, binding contract that prevents "gazumping".

This week, I bought my third property in a decade.

My move from a bachelor flat to a family home via the marital home has come amid enormous rises in property prices.

In the last year, house prices in Scotland have risen by 11.1%. The average price of a home now stands at 130,681.

A recent report by mortgage lender Halifax found house prices in Scotland had increased by 110% in a decade.

During this period, my mortgage has jumped almost sevenfold.

The homes I have bought have been at a fixed price, a tool often used for a quick sale or to attract interest after a period on sale at offers over.

Like the system elsewhere in the UK, the buyer knows what the seller wants. The person who makes the first acceptable offer wins.

Those homes I have sold have been under the offers over system, in each case going for about 20% above the asking price.

Open competition

This system is open to market forces, creates competition and aims to get as much money as possible for the seller.

The offer can be anywhere between 5% and 50% above the asking price - depending on the strength of the market and the buying power of the purchaser - and is often above the survey price.

Kenny Hill
It is a highly corruptible system
Solicitor Kenny Hill

Skilful negotiation can secure a house early. But others go to a closing date if more than one party is interested. You submit an offer and wait and see if it is enough.

Paul Murphy, of Personal Estate Agents, in Shawlands, Glasgow, is Scotland's Gold winner in the UK-wide Estate Agent of the Year Awards.

He and his business partner, Cliff Dunn, have more than 40 years' combined experience in the business.

Mr Murphy said: "In Scotland, the property is offered below what you expect to achieve to attract offers and bring in competing buyers.

"For buyers, it is difficult, for first-time buyers, it is very tough.

"But the deal is done when the offer goes through.

"Elsewhere in the UK, it can fall at any time. A lot of people admire the Scottish system because of its strengths."

Mr Dunn said the system was "open to market forces" and elsewhere you simply get the asking price, or below it.

"The system is designed to be advantageous to the seller, that is what keeps the market buoyant," he said.

The offers over system has left estate agents open to accusations of setting artificially low asking prices to create competition.

"We go with market forces, we are not dictating it, we must follow that system," said Mr Murphy.

Boom or bust?

Solicitor Kenny Hill, of Campbell and Sievewright, has 16 years' experience. He described offers over as unfair and pretty grim.

Cliff Dunn and Paul Murphy (Picture from Personal Estate Agents)
Cliff Dunn and Paul Murphy believe competition feeds a healthy market

"Some estate agents set out to unfairly draw in people who shouldn't be drawn in," he said.

"People are interested who can't afford it and pay for a survey.

"It is a highly corruptible system."

He described the system elsewhere in the UK as fair - the seller knows what the buyer wants and whether or not they can afford it.

The key strength, said Mr Hill, of the Scottish system is achieving a binding contract at an early stage - often within weeks of an offer.

"In England, you have no control, there is no binding contract and the system is fundamentally flawed," he said.

"Gazumping means you can put in an offer and someone can come in with a higher offer.

"That couldn't happen in Scotland."

While estate agents and solicitors disagree on the strengths of the Scottish system, they are agreed on its future.

Mr Hill said the market is sustainable.

"I've never heard of a crash in Scotland", he added.

Mr Murphy described Scotland's approach as sensible.

He said: "I don't think it will crash, we don't see boom and bust here."


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