Some questions on buying in Scotland

[FairyLightPups]

DP and I are looking to buy next year and quite honestly I'm very very confused by the entire system up here in Scotland.

So... the amount advertised on rightmove is probably under the home report, and under what they actually want for the house. That's right, isn't it? So then how do you find out what it's actually valued? Do they already have a home report or do you need to get your own? What if it's valued by your own less than it is by theirs and then your mortgage is lower? Do you literally just have to guess? How can you put down an offer when you don't actually know how much the house is worth in the eyes of a bank, when you don't know how much you'll need to top up?

And why don't people just put what they want for the house in the actual price, with the home report in the description of the post, instead of this ridiculous process of, from what I can see, a guessing game?

It depends area to area. Usually the price advertised is close to the HR value and you can request a copy of this. You don’t need to do your own. Surveyors are far too worried about being struck off by RICS to do a “friendly” one for a vendor.
The mortgage company will look at it and MAY send their own surveyor round but in my experience not that often.
Re pricing pre covid it was a general rule that if in Glasgow/Edinburgh allow for 10/15% over Home Report value and if anywhere else about 10% under. Not sure about that now!
Remember all offers are formal and submitted by a solicitor rather than yourselves so make sure you are absolutely sure you want it

Generally the ad weirded price is the HR value, and are generally the minimum the seller will accept. It’s a much more transparent way of selling than the English system. Basically if you’re not willing to pay at least the HR value don’t waste your time or the sellers by looking at it

Ad weirded?? Advertised!!

The seller sorts out the Home Report and that's what's used by everyone all the way through. So you get a copy of it before you put in an offer (ideally before you view), and your lender gets a copy and almost always takes the valuation from there. Sometimes you can download it off the rightmove listing and sometimes you'll need to ask the estate agent for it but it is perfectly normal to ask to see it.

Offers over is a bit of a guessing game BUT you might find it useful to look at recently sold prices on the Registers of Scotland website where you can see what specific houses actually went for (as opposed to relying on estate agents 'sold' listings).

Re pricing pre covid it was a general rule that if in Glasgow/Edinburgh allow for 10/15% over Home Report value and if anywhere else about 10% under

I always found that houses generally went for over the asking price pre covid. I paid 10% over 5 years ago. Houses where I stay are currently pretty much all going to closing dates and 25/30% over

You can get the HR easily and indeed before you view. It's usually on the listing with a link to the estate agent.

That tells you what it's worth and what your lender will lend upon.

In terms of what you offer, well. Whole other story. In Edinburgh things are going for at least 20% above HR, so people must be using their deposit to pay the extra and then getting a higher LTV on their mortgage.

So if you want to buy a house valued at £100k and have a deposit of £30k (70% LTV) you're going to have to pay £120k and get a mortgage of 90k (90% LTV).

What you're not going to be able to do is get a mortgage above HRV, so if you only have a deposit of £19 you won't be able to get a mortgage of £101 (101% of LTV). And I think it's pretty impossible to get anything under 90% LTV anyway??

It's a freaking minefield, my DB just bought and had to find cash from family to top up the 20% overage.

The home report is what the actual property is approx worth and usually what mortgage you will get from a bank. You get the home report from estate agents when you are interested, usually before a viewing. Owners will likely want 15% plus OVER that, 20% in Glasgow and more in edin.

So... the amount advertised on rightmove is probably under the home report, and under what they actually want for the house. That's right, isn't it?

The amount on Rightmove is the price at which they expect offers over to be made. E.g. price is £100,000 - they expect offers over that amount. If the going rate locally is to offer 10% over then you will need to offer £110,000 to secure the house.

The exception is where it is listed at a fixed price. Then its the first person to make that offer who gets it.

So then how do you find out what it's actually valued?

The valuation will be listed in the Home Report

Do they already have a home report or do you need to get your own

All vendors have to purchase a home report which is available to all buyers. There is no need to get your own one done.

What if it's valued by your own less than it is by theirs and then your mortgage is lower?

Mortgage lenders use the Home Report commissioned by the vendor for valuation.

Do you literally just have to guess? How can you put down an offer when you don't actually know how much the house is worth in the eyes of a bank, when you don't know how much you'll need to top up

The valuation is what is the Home Report. However you may have to offer more than the value to secure the house.

And why don't people just put what they want for the house in the actual price, with the home report in the description of the post, instead of this ridiculous process of, from what I can see, a guessing game

You do know the value so you don't have to guess that. What you do have to guess is how much to offer over the asking price. If you are the only bidder then you can usually get a steer from the estate agent on how much to offer. However if you find yourself in competitive bidding with a closing date then you have to put in a sealed bid with your best offer and hope its higher than everyone else.

The other way to go is to buy new build as they are all fixed price.

The home report is what the actual property is approx worth and usually what mortgage you will get from a bank. You get the home report from estate agents when you are interested, usually before a viewing. Owners will likely want 15% plus OVER that, 20% in Glasgow and more in edin.

But... but... but.. if someone pays 15% over surely that's what it's worth because that's what it sold for? And there will be more than one offer over the asking price.

Thank you for this. God it's all a total minefield and schemes like the LIFT scheme aren't even useful because you have to buy the house at home report and as we all know that's not happening at the moment. Gahhhhhh!

@urbanbuddha

The home report is what the actual property is approx worth and usually what mortgage you will get from a bank. You get the home report from estate agents when you are interested, usually before a viewing. Owners will likely want 15% plus OVER that, 20% in Glasgow and more in edin.

But... but... but.. if someone pays 15% over surely that's what it's worth because that's what it sold for? And there will be more than one offer over the asking price.

Indeed. There are basically two definitions of worth - what the bank think something is worth (Home report) and what a buyer thinks something is worth (offers over the home report).

It's total bobbins!

Where (roughly) are you looking?
In many parts of the north east things are going at or under the asking price. Flats in particular are struggling.
Have a look at sold prices and see if you can find any of the old links on Rightmove. Sometimes they still come up on an address search.
Start your own list of things roughly in your budget/location and keep an eye on their sold prices appearing.
Your solicitor will generally have a decent grasp on local trends so seek their advice as they'll need to put in your offer

@FairyLightPups

Thank you for this. God it's all a total minefield and schemes like the LIFT scheme aren't even useful because you have to buy the house at home report and as we all know that's not happening at the moment. Gahhhhhh!

We sold a house under LIFT (or the equivalent, it was a few years ago now) but it was a starter home in a new town. You'll have to hunt hard/be out of popular areas to find something that will sell at HR at the moment.

However, as I keep saying, this really can't last!

It’s absolutely not a minefield. The Home Report gives you the value and it’s up to you to decide what it’s worth to you🤷🏼‍♀️

Houses in our area (Perthshire) are going for at least 10% over home report, sometimes more if they are in a really desirable area/great view/character.

I think the Scottish system is great once your offer has been accepted, but the whole closing date sealed bids thing before is madness. It encourages wild house price inflation as people are so desperate to secure a property that they bid stupid amounts in an effort to outbid everyone else.

FWIW we refused to get into the whole closing date palaver. We found a property we liked and made an informal but very fair offer via the EA, with the proviso that we wouldn't be submitting a bid so it was take it or leave it. We did this twice and it worked both times (pulled out of the first one after a rethink). It's sometimes worth a go.

@WellNotReally

Houses in our area (Perthshire) are going for at least 10% over home report, sometimes more if they are in a really desirable area/great view/character.

I think the Scottish system is great once your offer has been accepted, but the whole closing date sealed bids thing before is madness. It encourages wild house price inflation as people are so desperate to secure a property that they bid stupid amounts in an effort to outbid everyone else.

FWIW we refused to get into the whole closing date palaver. We found a property we liked and made an informal but very fair offer via the EA, with the proviso that we wouldn't be submitting a bid so it was take it or leave it. We did this twice and it worked both times (pulled out of the first one after a rethink). It's sometimes worth a go.

We're looking to buy in Perthshire too, specifically Crieff/Auchterarder/one of the wee villages. We've been advised that Crieff & Auchterarder are going for 10% over with 15%-20% over in Muthill, Blackford and Aberuthven, and 25% in Comrie. If we manage to buy next year at all, it will be a miracle.

So can the asking price be above the home report already?

And by 10% over does that mean over home report or asking on rightmove etc?

There's too many variables to answer. The offers over price will be whatever the vendors have decided it to be. How much stuff goes for over depends on your local area, the type of house, etc. In Scotland you submit offers through your solicitor so they should have their finger on pulse and advise what's usual in your area, and you can see what other properties have sold for to get an idea. Speak to your solicitor and see what they have to say.

@FairyLightPups

So can the asking price be above the home report already?

Well we don't really have asking prices. But yes, offers over could mean a figure over the home report value, or even (believe it or not, back in olden times) below the home report value. But the home report value is where your mortgage lender will focus their attention.

@FairyLightPups

And by 10% over does that mean over home report or asking on rightmove etc?

On the advert, you'll see 'offers over £120k' or whatever. That 120k should be fairly close to the HR value. But they're looking for you to pitch your best offer somewhere above that.

www.pspc.co.uk/4-Bed-Detached-Villa-For-Sale-Findlaw-Cottage-Madderty-PH7-3PW

Look at that viewing.

Click 'view schedule'

On the very back page of the schedule, you'll see the home report value of £575.

They want offers over £575k - in other words, more than HR value.

You've said Crieff is going for 10% over HR value, so the number in their head is round about £690.

But both you and @WellNotReally want this house and you're fed up looking. So you decide to offer 15% over HR value because the person that bids the most will get the house. WellNot can't afford that, £690 is the top of their budget, so you get the house.

It isn't really complicated, just nerve shredding!

@MaChienEstUnDick thank you, this is so helpful. Nerve shredding indeed!

At the moment: ignore "asking " and offer over "home report".
We re going through the same madness at the moment Agree why not just bloody put a price up that the home report when nobody in the past 18 months has paid anywhere near the asking.

Can you just stick to the fixed price houses. Then that's more or less first come first served. Failing that do a search on sold prices in that area to give you an idea of what would be a reasonable offer.