For a property seller in Scotland, setting a closing date for a property is one of the best scenarios you can reach. Aside from maybe getting a clean offer way above the valuation nice and early, a closing date often leads to a high end sale price. The very nature of a closing date stimulates competition amongst the buyers to go above and beyond what they may otherwise have paid. So how do they work? When should you set one? How do you approach one from the perspective of a buyer?
How does a Closing Date work?
A Closing Date is a time and date specified by a seller where all buyers can place a final offer. They are usually set when there are multiple buyers expressing formal interest. Once a date and time has been set, all prospective buyers must make an offer at that time. As per the Scottish system, bids are closed so that no-one is privy to anyone else’s offer amount. This encourages buyers to place their highest offer for the property. Once all the offers have been submitted, the seller reviews them with his/her agent and can choose which one to accept. Importantly, there is no negotiation at this point and the seller is not obligated to accept an offer unless one of them is deemed acceptable.
From a sellers perspective:
The job of the seller is very straightforward in this scenario. The difficulty can be in knowing when to set a closing date. It can be straightforward if you are immediately inundated with offers after only a short time on the market. Closing dates are usually set about a week in advance. This provides more people the chance to view and get involved and gives those who are already interested time to get their best offer together. However, should you only have a couple of notes of interest and one person formally offering, or less interest than that, it can often be more prudent to allow your agent to negotiate the best price for you. On the day of closing, you can wait for the offers to land, assess which one is best for you, and decide whether or not to accept it. Usually it’s a matter of waiting for the highest offer.
From a buyers perspective:
A closing date for a buyer can often be a nightmare. You might find yourself up against a large number of other buyers all vying for the same property. So how do you know what to offer? Well, your solicitor, if they’ve been in the property market for a while, will be able to provide a good estimate of what it’s likely to sell for. While they can offer advice, they can never provide a guarantee. And in a market like Edinburgh, there’s always a chance of getting out-bid. So, if this is a property you’re truly invested in, it might be your dream home or BTL investment, it should make the decision easier for you. You need to decide what the highest amount you would pay for this property is. That way, should someone come in with a higher offer, you can hold your hands up and be reasonably content (if possible) with missing out. The same won’t be true if you could have offered a further £5k only to miss out by £2k. Should you have been unsuccessful, your solicitor is able to inquire where you have placed and how much you have missed out by. This will be a rough estimate to protect the seller should the offer fall through at a later date. It’s good information to get though as it will inform you about the market when you come to offer on your next property.
So hopefully this provides you with a grasp of how a closing date works, when they are set, and how they are approached from the perspectives of a buyer and a seller. If you have any further queries, need help with a specific closing date, or have some comments that could help, then please feel free o get in touch.