Buying a property is quite complex and challenging, with many hurdles faced by homebuyers along the way such as mortgage process and documentation, chains that can make a transaction collapse at the last minute. Not to mention the associated plethora of terminology and jargon…
Often it’s not enough just to have a simple asking price – other terms that are commonly used by estate agents and appear on property adverts include phrases such as ‘offers in excess of’, ‘guide price’, ‘price on application’ or ‘offers invited’
What do these mean?
Offers In Excess Of (OIEO)
An estate agent adds this phrase to the front of a price to indicate that they want offers higher than stated, such as ‘offers in excess of £600,000’.
There is a strategic reason behind: in doing so estate agents list the property in a lower price band in order to get more traction and views on property portals such as Rightmove and to try to entice potential buyers in the lower price brackets to come up higher and consider these properties.
‘Offers in Excess Of’ can consequently be interpreted as ‘it didn’t sell at the higher price, but the seller wants more than the next bracket down, so we (estate agent) will do OIEO to make the vendor believe they will get more, when they probably won’t’.
In reality, what this phrase means is that those selling the property ‘want more than what it’s worth’.
At the end of the day, let’s remind ourselves that a buyer decides what a property is worth, whilst the owner has the luxury of deciding if it’s enough or not.
One of the most common terms on property adverts is ‘a guide price’, which can also leave buyers wondering what to offer.
In essence, what this phrase is telling buyers is that the agent thinks it is worth this much, but ultimately they are not really sure.
Price On Application (POA)
One of the phrases often seen on expensive, prime residential and also off-market properties is ‘Price On Application’.
I particularly like this one, as it leaves room to so much interpretation, and overall confusion….
It tends to suggest a certain element of exclusivity about the property. And if one enquires about the price of the property, it is very much likely one cannot afford it.
In reality, it means that that the estate agent listing the property will want the details of interested buyers so he can contact them once the client has come back to his senses and a more realistic and sensible price can now be discussed.
It is not uncommon to see the phrase ‘Offers Invited’ populating on property listings.
In reality it means that the estate agent listing the property doesn’t actually have a clue about what price the property is worth and is instead relying on buyers to come with a proposed offer (‘You tell us’).
So buyers – What should you offer then?
As a potential interested buyer, you may be worried that if you don’t make an offer for the full asking price, or even in excess of the figure advertised on the property listing, your offer will be totally disregarded by the agent.
What offer should you make on a property you like?
As property finder and buying agent, here is my professional advice: you should offer what you believe the property is worth to you, in your eyes!
Keep in mind that estate agents are retained by the seller. And they act exclusively in the best interests of sellers. In fact, they have a fiduciary duty towards the seller, and so are legally obliged to act in their best interests. Their prime objective is to achieve the highest price possible for those clients – acting in the seller’s best interest, as required under their agency agreement.
Make sure you stress all the possible advantages of your bid, and in particular that:
- you have an appointed property solicitor (choosing the right solicitor for your conveyance is the single most important thing you do as part of your property-buying journey),
- you have a mortgage agreed in principle (estate agents might require proof of mortgage in principle before submitting your offer to the seller),
- if you are a cash buyer, even better! Let the agent know about your buying position as your offer is also likely to be favoured over competing bids,
- your offer is not conditional of the sale of another property (hopefully),
- you can move the purchase and conveyancing process at a pace to suit the seller (some sellers might favour not the highest bid/offer but a buyer who can exchange contracts and complete within a set or preferred timeframe).
When submitting an offer, be prepared the best you can. Present your offer in the best possible way and give both the estate agent and seller the most confidence that you will deliver on the bid and the terms of your offer!
Lots of people link what they paid for a property to the original asking price, thinking the bigger the discount the better the deal. But they could not be more wrong: asking prices are not a statement of value!
The asking price is part of the marketing. When pitched correctly, it should attract potential buyers.
The asking price is NOT:
- An indication of value
- A statement of what the seller might accept
- Necessarily what the estate agent advised
- What a bank (or private lender) and a mortgage valuer might value it at.
Property buyers remember: a house is never more than what a buyer is willing to pay. But what a buyer is willing to pay is not fixed.
Asking prices are NOT a statement of value! Price is what you ask. Value is what you get.
Domus Holmes Property Finder is an independent property-buying agency providing a comprehensive property search and acquisition service to clients looking to buy a home or purchase an investment property in Bristol, Bath and the South West of England (Somerset, Gloucestershire and the Cotswolds) as well as West and Central London.
For a free, no obligation consultation and discussion about your property search, please contact Jerome and Claire on:
T: +44 (0) 117 973 3683
M: +44 (0) 7734 115 098