Initial offer rejected and closing date set on repossessed 2 bedroom mid terrace house
As mentioned in a previous post, we had made an offer slightly above the asking price on a repossessed terrace home that had the potential to give us a yield of over 9.4%.
At 09:18 on Wed 4th September 2013, our solicitor had acknowledged our email and had informed us he would be back in touch shortly, once he had contacted the seller’s estate agent.
At 13:10 on Wed 04/09/2013, our solicitor came back to us to advised that a closing date is likely to be fixed and also told that sellers have already rejected another offer which was circa £50,000.
This is unusual with repossessed properties, since the seller is normally a bank who are just trying to recover their outstanding loan. This property was “offers over £45,000” and the home report only valued it at £50,000, so it is very unusual for a property like this to sell or so high above the offers over price. However similar properties had a just a few years ago sold for over £70,000. The property was also in a very good area, with a great school nearby, so this may be driving the price upwards.
At 10:52 on Fri 06/09/2013, our solicitor emailed us to advise that a Closing Date had been set for the property on Tuesday 10/09/13 at 12pm.
In Scotland, especially before the global recession, it was quite common for properties to be sold on an “Offers Over” basis. The seller advertised the property at Offers Over a certain price. Sometimes this price was set at the minimum the seller would like to get for the property. Sometimes the seller and the estate agent would set the price way below the value of the property in order to try to attract more viewers in the hope that someone would fall in love with the property at any price.
At the peak of the Scottish property market, properties were sometimes selling at 20 to 30% above the Offers Over price. This used to be quite common in Edinburgh, were a buyer may have paid for expensive surveys and legal fees and lost out on previous properties and may then have decided they want to get a particular property at almost any cost. Working on the basis they would offer the most they could afford, this helped fuel the massive rise in property prices in Scotland at the start of the 21st century.
When a Closing Date is set for a property in Scotland, interested buyers make a confidential, binding offer on the property via the solicitors. The highest bidder then gets the property – a little like a silent auction.
So we need to decide if we want to make an offer on this buy to let property and if so, how much?