Buying a house or property is not an easy task. The process can be challenging and cause a lot of headache. You have to deal with complicated mortgage forms and fragile chains that may cause a deal to collapse instantly. For this reason, most people go to real estate agents to help the process more bearable.
However, the challenges do not stop instantly because you also have to understand some complicated terms used by estate agents. They use specific terms to refer to the property they are trying to sell and other significant aspects of the process. One of the most common terms used by real estate agents is the asking price. This term refers to the amount of money the vendor or the agent wants for the property. The owner of the property usually determines it. Sometimes, the asking price is not all you need. you may find yourself faced with other terms like “offers in excess of”
What is the meaning of “Offers in excess of”?
“Offer in excess of,” also referred to as guide price, is a common term used in the property industry. This term is designed to refer to a starting point from which to make your offer. For instance, if the guide price is £275000, then your offer cannot go below this amount, but it can exceed it as much as you want. However, most potential buyers often get confused about this term and how they need to interpret it. This is mainly because the acronym or term is often included in the property price.
Reasons why OIEO is usually included in a property price;
The most common use of this term is to refer to the agent or vendor compromise. The vendor may have to look at all comparable evidence and agree to a marketing strategy to help achieve the ideal price using Offer In Excess Of. The marketing strategy is often based on the idea that the lowest price, which is the Offer In Excess Of, will attract a larger number of potential buyers.
Another common use of this term is to encourage interest in a property. The OIEO is a competitive price often indicated below the home report valuation. It is determined based on the understanding that the eventual price paid for the property will be higher. Therefore, it acts as a starting point or marks for bidders or potential buyers to make offers.
Additionally, the guide price can be used in cases where it is hard to value a property. This can happen when the property or its location is highly unique. Most of the time, the agents or vendors do not have a precedent regarding the sold prices for comparable properties in equivalent locations. This is usually the case with architect-design homes, grand designs conversions, and castles. In such a case, an agent will list a vendors bottom line price. This is the lowest price the seller is willing to accept for the particular property. Potential buyers will have to meet this price or go higher.
OEIO can also be used if the vendor feels that their property is worth more than valued. It may also be worth more than the amount of money they spent to purchase it or build it. Using the phrase may encourage buyers who limit their search to a specific amount of money by making them believe that the property is worth that specific price.
Can you make an offer below the guide price?
One of the most commonly asked questions in real estate is whether you can go below the OIEO price. Practitioners also like to know what would happen if they went below the Offer In Excess Of price. Many potential buyers worry that their offer would be disregarded or not accepted if they went below this amount. However, the wiser thing to do is to send whatever price you think the property is worth to you. You can use your agent to add some charm and justify the price as best as they can.
You also have to stress the advantage of your bid and make sure you have all the arrangements in place so that if your bid is accepted, you can complete the purchase as soon as possible. The justification may charm the vendor to accept your price even if it is below the guide or asking price. Most of the time, sellers want to sell a property for more than the original price. Therefore, even if you go slightly below the asking price, you are still likely to remain above the property’s original price. The bottom line is that there is no harm in going below the guide price. Studies indicate that eighty-five per cent of homes sell for less than the asking price.
What is the difference between the asking price and Offer In Excess Of
The asking price is usually the amount of money the vendor hopes to get from the property. On the other hand, the latter refers to the amount which the vendor feels the property is worth or more.
Other important terms you need to understand
In addition to the guide price, there are a few other important terms you need to understand;
Price of application
This term is common when selling or purchasing expensive homes. Therefore, when you see the term; price of application, it indicates that the property is exclusive and often very expensive. In simpler terms, this phrase is used to show that the property is quite different. If you come across this term, you must provide your details so that the agent or vendor can contact you and quote a sensible price.
This is the simplest of all the terms mentioned in this post. This phrase means that the agent or owner does not have a clue about what the property is worth. When different people send in their offers, it helps give the agent a clue of the asking price or selling price. Here, the agent is asking the buyers to help value the property. If you come across this term, the best thing to do is send an offer depending on what you think is the property’s value. You can ask your agent to couple the offer with a justification.
Is it wise for estate agents to use Offer In Excess Of when selling a house?
The main reason why potential buyers get confused by this term is that it is not as common as asking or guide price. Most of the time, potential buyers are put off by the term. This is because it is often confusing and can come across as arrogant on the vendor or agent’s side. Potential buyers and other agents know that this term is used if the vendor feels that their house is worth more than it is, hence the arrogance.
However, this does have to be the case all the time. Potential buyers can interpret the phrase as the market value of the property. Therefore, using this term while selling a property can be quite a gamble. It can either encourage the faster sale of your property by attracting a lot of potential buyers. However, it can also go the other route and put off potential clients.