The Home Report is the place to start
A Home Report is a legally required document that details essential information about properties on the market in Scotland. It provides potential buyers with information about the condition, value and energy efficiency of the property in question, so they can make a reasonable assessment of it and whether they think it’s valued correctly.
The Home Report is paid for by the seller, but it’s possible for prospective buyers to initiate their own survey either through their lender or directly. This isn’t a common practice, however, and is usually reserved for investigating issues raised in the Home Report.
If this survey reveals something untoward or unidentified in the Home Report that causes concern, this should be factored into the best offer you propose.
Make your best offer based on the Home Report
With the Home Report digested, you should be able to make your best offer based on its findings and the property’s valuation. The Scottish property market works on an offers over system, which means potential buyers submit sealed offers and the best one wins.
This is the best stage to make negotiations against the findings of the survey. Make sure you’ve done your research around similar properties in that area to ensure that you’re offering the right price. Generally, the asking price of a property sits a little lower than the valuation on the Home Report to attract attention, so it’s worth factoring that into your assessment when making your offer.
What to put in your offer
Offers on properties will be sent to the seller by your solicitor who, in Scotland, usually acts as an estate agent. Here’s what will be included.
Your best offer. The bottom line. This is how much you’re willing to pay based on the asking price, the findings of the Home Report, trends in the local housing market and anything else that factors into your decision.
Entry date. This is subject to negotiation, but your entry date usually sits around two months after the mortgage offer has been made.
Proof of funds. You’ll need to provide evidence that you can afford the offer that you’ve made. This is usually done through your mortgage lender or through direct funds.
Additional conditions. If something was revealed during the survey, this may be the place to highlight it. This is also a good place to mention any of the benefits of your offer such as if you’re without a chain.
When a contract becomes legally binding
Once an offer is accepted it is not legally binding until the conclusion of the missives. The missives is a period where legal representatives from both sides agree upon points of the contract in writing. Once both sides are happy that the process becomes legally obliged to proceed with the sale.
If either side withdraw beyond this point, they could incur a financial penalty.
...but you can still be gazumped!
It’s not as common in the Scottish market, but there is still a risk of a better offer coming in during the missives stage. This is called gazumping. During this stage, properties will be listed as Sold Subject to Contract (STC) and, as the legal work is yet to be completed, it’s possible to be undercut by another buyer.
It’s an unfortunate thing to happen and, if the new offer is serious, means you have to improve your offer to compete or walk away from the property.