PSPC Jargon Buster: Asking Price
06 March 2023
The aim of our Jargon Buster series is to break down the terminology of the property industry to help you feel confident and in control of your home-buying journey.
In this article, we’re discussing the term ‘Asking Price’, and what it means when buying a home in Scotland.
What is an asking price?
The ‘asking price’ of a property is the price that a property is being advertised for.
The asking price can be confusing when buying a property in Scotland, as often, it isn’t a price that a seller is actually hoping to achieve. In many instances, sellers will be planning to sell the property for a figure higher than the asking price.
To add to the confusion, generally properties will be advertised with an ‘offers over’ asking price, as well as their official Home Report valuation, leaving pricing open to interpretation.
The Home Report valuation is the more important figure, as it has a factual basis -- mortgage valuations will be based on the figure quoted in the Home Report.
In many cases, properties will sell for a figure higher than either of these prices, but you can use them as a guide to judge what price a seller might deem acceptable.
What other pricing terms exist for property?
‘Offers over’ is the most common term in property pricing. This means that the seller will only consider offers higher than the figure quoted – but as explained above, the safest course of action is to examine the valuation in the Home Report, as the ‘offers over’ price is generally lower to attract interest, and isn’t a serious reflection of the figure the seller is looking for.
‘Offers in excess of’ means the same thing as ‘offers over’ – so, for example, if a property is advertised at ‘offers in excess of £250,000’, it means that the seller will not consider offers lower than £250,000 for their home.
‘Offers in the region of’ means that the seller is more open to negotiation. It is best to check with your solicitor and the selling agent when considering a property listed this way, as they may be able to give you more insight into what might be an acceptable price to offer.
Some properties will be advertised with a ‘fixed’ asking price, which means the seller would be happy to accept an offer of this price from the first buyer in the right position for moving.
Properties listed as ‘price on application’ are less common. This is where the asking price is withheld, and you will need to contact the selling agent in order to find out details. This system is most frequently used to attract serious buyers only, perhaps when a seller is especially private, or a property has a particularly high value.
Should I offer over or under the asking price?
Your PSPC solicitor estate agent will be able to guide you when it comes to making an offer on a property. TSPC solicitor estate agents have access to data about the local property market in the area you’re interested in, to help you decide on a figure that you feel comfortable offering.
While it is much more common for homes to sell for over their asking price, it may be possible to have offers accepted for under the asking price. Every property and every seller is unique, and so you can never tell what price a seller might be happy to accept, unless you ask the question.
As a general guideline, if a property is popular with viewers and the seller has set a closing date, then it is more likely you will need to make an offer that’s higher than the property’s asking price. However, if the property has been on the market for a long time, if it needs a lot of work, or if the seller needs to move quickly, then you may be able to negotiate on a price that suits all parties.
Does the asking price affect my mortgage?
In a nutshell, yes.
It’s important to remember that when buying a property in Scotland, mortgage lenders will only consider the official valuation of the property when it comes to deciding on your eligibility. Sometimes they will consider the asking price, but this is only the case if you pay less than the Home Report valuation for the property.
This means that any amount that you offer to pay over the Home Report valuation cannot be included as part of the property’s purchase price in terms of your mortgage, and will need to be covered by your own finances.
For example, if you bid 5% over the property’s Home Report valuation (which may in itself be thousands of pounds more than the ‘asking price’), you will need to pay that amount yourself, on top of your deposit and legal costs – the ‘overbid amount’ cannot be incorporated into your mortgage.
Find out more
Ready to start your property journey? Find a PSPC solicitor estate agent near you, who can help you on your way to finding your dream home.