Scottish property system

Not an argument that sways me. If adults with some degree of common sense bid more than they intended, then they are crazy. But when the system is blind and mired in secrecy, it's the system that is crazy. And what kind of auction system other than this sealed bid system for Scottish property would last more than a second if, say, you went to an auction room to buy an antique and you only had one bid available to you?

There must be thousands of Scots who, after moving in, hear through the grapevine that Mr X would have willingly accepted a much lower offer. In other words, Mr X has ripped off the buyer.

So, surveyors, lawyers and mortgage lenders need scams like this to work at speed!! In other countries, surveyors, lawyers and mortgage lenders work efficiently within a fairer system. That is no argument. As for gazumping and so on, simply make the offer (for English/Welsh properties) binding at the time of the offer with a significant deposit. That would also have the effect of cooling the market, as people would need the readies to begin with and you wouldn't be plagued by time wasters who haven't even put their own property on the market yet. I have had several of these, and it never ceases to amaze me that they think (like I once did) that selling one's house was a mere formality.

As a seller, I can understand! As a buyer, I'd be extremely put off by the Scottish system. And once I'd bought my house there and had spent a few years living in it, if I decided to move, I'd get it valued and play fair with people by stating a fixed asking price. Not much to ask, is it?

MM

Perhaps what I really mean is "no chain". That is, cash to me is just as sound if it is advanced by the buyer's mortgage company. But that sort of stipulation is a bit difficult to phrase succinctly. Try it!

MM

And it is this one significant feature that makes it grossly unfair, in my opinion. It is a method for cheating buyers out of their hard-earned wherewithal instead of playing fair with them. Question: If this is such a wonderful system, why are new homes not sold in this manner? Why are eggs, butter, bread, milk, cars, boats, trains, or planes not sold in this manner? What other material good can you name that keeps the price a secret that you have to guess?

MM

How does it cheat buyers? You place a sealed bid with the seller solicitor. All bids are opened at the closing date/time. The potential buyer knows how much he can afford and has place a bid based on a survey. The surveyor will know the state of the market and what price other similar properties have fetched.

The seller, if asked, will probably indicate what he/she is willing to accept. I have bought/sold 4 properties in Scotland and it is a much more straightforward system by far. I have never been ripped off/cheated and it prevents all the timewasters (and sometimes corruption) that you get with the English system.

If it is an overheated market then bids can be placed that will be over the top. But the same happens in England - apparent transparency on bids does not prevent this happening.

MM seems to have a fixation on offers over.It does not really make any difference. Price it high or price it low, or even offers over - it will sell at a price determined by the market and the common sense, or otherwise, of the parties involved.

Why not indeed.

Watching this last night, my wife and I decided that a simple tax, on the difference between the Offers Over price and the final selling price, charged to the vendor, would encourage them to come up with a realistic Offers Over price in the first place.

Sealed bids are normal practice in all kinds of commercial transactions. It is commonplace the world over for somebody purchasing goods or services to invite sealed bids from would be suppliers and then to select based on what is offered and the price. This is simply the reverse of that.

It's also naive to assume that the English system is transparent. If you make what appears to be an open bid as a buyer, the agent or the vendor can say that they have a higher one in an effort to bid up the price. It may or may not be true. A sealed bid system does at least prevent the wasted time of going round in circles.

This is simply not true. The buyer made an offer that they were happy to do at the time and the vendor accepted it. Both parties were happy at the time and that is the end of it. It isn't a rip off at all.

In any case, the buyer has had the opportunity to get a valuation and to decide whether he wants to bid at, below or above this value.

In an open system, if the market is rising, the same thing happens - the bidding goes up beyond the point that the vendor would have accepted in the first place.

From what you are suggesting, you would only be happy to accept a situation where the vendor sets a minimum price that he would be happy with and advertise that, so that the first buyer willing to pay could come along and make that offer. Why would any vendor want to do that?

That's up to you, but I can't see many vendors agreeing with you. The property market isn't about playing fair. It is about the vendor getting as much as they can for their property consistent with making a sale at all and the buyer paying as little as he can consistent with being able to secure the purchase. It's not a gentlemen's club.

.andy

To email, substitute .nospam with .gl

I think you'll find that sales by sealed bid tender are not at all uncommon where you are selling something that it is not easy to put an exact value on. I certainly don't see any case for moral outrage: no one makes you put in a higher bid than you wish and you're not tempted to do so in the heat of the moment as with an auction.

"Mike Mitchell" wrote | But when the system is blind and mired in secrecy, it's the | system that is crazy. And what kind of auction system other | than this sealed bid system for Scottish property would last | more than a second if, say, you went to an auction room to buy | an antique and you only had one bid available to you?

Sealed bids (tenders) are a standard way of negotiating a contract price throughout industry and public sector administration.

Owain

The message from Mike Mitchell contains these words:

You don't understand property valuation in Scotland.

If you paid attention to that programme, in each and every case, KA advised the prospective buyer what the "expected price" would be. That's what lawyers and surveyors do here. When I sold my last property and bought this one, my lawyer forecast the winning sale bid (among 15) within £1000, and advised me on a buying bid (among 5) which won by £500. That level of experience skill and mutual trust, is the reason I employ him.

People who stubbornly ignore the recognised signals of the market and experienced advice, are liable to wrongly value a property. Janet

Good idea!

MM

You're dead right, there! In Scotland at least, it's a rip-off in shark-infested waters! We are not talking about multi-million or multi-billion pound contracts or tenders to build a bridge or a tunnel under the Alps. We are talking about domestic dwellings which happen to be, for most people, the one and only large asset they will ever acquire. And it is simply not fair for the system to allow the kind of practice to go on where the buyer simply does not know beforehand what the vendor is willing to accept. You can dress it up any way you like, but that is how I see it. Not only me, either.

MM

The message from Mike Mitchell contains these words:

In English/Welsh property law neither an offer, or a deposit, binds the seller or buyer to complete the contract. Your solicitor should have told you that. Er..you are employing a solicitor to conveyance your property sale, aren't you?

What do you intend to do if someone offers to buy your English house at the asking price, and a week later someone else offers you a thousand more, cash purchase?

Janet.

The aim being to secure the bridge, computer system, or hospital building at the *lowest* price commensurate with specification equivalence!

MM

Duh, because the very suggestion would be risible among the vast majority of consumers!

MM

The message from Mike Mitchell contains these words:

If you stipulate "no chain", you eliminate all buyers who have a property to sell in England and Wales. You'd better start advertising in Scotland.

That is, cash to me is just

Meaningless. Mortgagors don't make, or promise, cash payments to the seller in advance of the conveyance.

Janet.

Okay, then. Please explain why vendors in Scotland largely pursue this unfair system, and, as you ponder, think carefully on the "unfair" bit. If buyers are expected to get a valuation, what is wrong with the concept whereby the vendor, i.e. the bloke with the goods to sell, gets a valuation and prices the property accordingly? I'll tell you why: It's so the vendor can quote some ridiculously low price, thereby seducing buyers into his web, banking on the fact that buyers will put in silly (i.e. exaggerated) offers so that the chance of getting *far more* than the property is actually worth is greatly increased. This to my mind exactly describes a scam, pure and simple. Basically, as I see it, the vendor is using the system to *take advantage* of the buyer. In other words he is not playing fair. Also, the system must be crumbling at the edges because I am seeing secondhand properties advertised at a fixed price, so obviously some people must agree with how I see it. Vendors in Scotland must be incredibly greedy or incredibly frit that they dare not state a fixed asking price, just in case their pound of flesh isn't two pounds.

MM

It isn't really an issue of dressing it up. This is a perfectly reasonable commercial practice and the rules of the game are completely clear to all concerned. It really doesn't matter that it is the one large asset that somebody will own either. I see no reason why the buying and selling of that should differ from normal commercial practices. After all the vendor is not a charitable organisation operating as a benefactor to the buyer, and I don't see why the buyer should expect that.

Also you are assuming that the vendor will provide a figure for what they are prepared to accept in the English environment. If I were selling a property and I thought that there will be multiple offers coming along, I am certainly not going to tell any of them what I am willing to accept. That would be giving my negotiating position away, and why would I do that? I'm not a charity either. If such a question were to be asked, the obvious answer would be the askinging price but then I would invite offers. I have the choice as to whether to accept, refuse or wait. If it's a rising market and plenty of competition among buyers, then I'd wait. Otherwise I might be tempted to accept.

If you feel that life should be any different, you really shouldn't be in the property market because you will have difficulty buying and give away the farm on selling.

.andy

To email, substitute .nospam with .gl

: It's so the vendor can quote some ridiculously low price, thereby

Dear me. We are all very naive and trusting are we not. Can I interest you in my property. Offers over £1.

If you don't know what a house should be worth then you are not in a proper position to make an offer. A two minute chat with another estate agent will soon sort any confusion about a house price. In any event, you are not compelled to make an offer on any property. Its a free country (I think)

The message from Mike Mitchell contains these words:

Please explain why vendors in Scotland largely pursue this

If it was unfair to buyers, or distorted property prices, mortgage lenders wouldn't risk making loans on such purchases.

If buyers are expected to get a valuation, what is wrong with the

He does.

I'll tell you

Most buyers have a mortgage. Mortgagors value property before they decide how much they will lend on it. That simple economic restriction prevents properties from being sold for "more than they are worth". If your misguided notion was correct, then half Scotland's property owners would be in negative equity (owing more on the mortgage, than their house would fetch if it was sold). Unlike England, negative equity is almost unknown in Scotland.

Also, the system must be

Fixed-price on a 2nd hand property in Scotland is usually a sign that the owner is desperate because either, the property is hard to sell, or, he can't pay the mortgage and the lender is about to foreclose. Or, the owner has already defaulted on the mortgage and it's being sold by the lender at a fixed rate just to recover the loan.

Greed would be asking more for a house than buyers want to pay for it. That appears to be your problem. Sooner or later, you'll understand that buyers, not vendors, dictate property prices.

Janet.