Most people reading this will have come across the expression Closing Date in connection with selling and buying property in Scotland and perhaps will have some idea of what it means.
Historically in Scotland, we have had the system of setting Closing Dates when selling properties where there has been competition for that property – i.e. there is more than one buyer looking to buy that property.
The system of closing dates is not UK-wide and indeed when you see some of the older episodes of Location, Location, Location set in Scotland, it is always amusing for us as estate agents and solicitors in Edinburgh, to see the bafflement of Kirsty & Phil in getting to grips with the idea of closing dates.
So what’s been happening in 2017?
During the recession following on from the Banking Crisis, closing dates for properties were extremely rare but during 2015, more so in 2016 and since the start of 2017 it has remained the same; we have seen a vast increase in the frequency of properties for sale going to a closing date, particularly in Edinburgh and Leith where we are based.
Why? Simply because – and especially in 2016 and 2017 – there have been more buyers looking to buy properties than there are sellers deciding to put their properties onto the market for sale. A classic example of demand outstripping supply. Indeed, we have found that some of the properties we have put onto the market for sale in Edinburgh and Leith this year have had as many as 15 or more buyers wishing to buy it.
And what does that mean? It means that property prices in places like Edinburgh and Leith have risen significantly during 2016 and the start of 2017. It is not uncommon that properties are selling at prices which are 10% above their Home Report values and that has been our experience in selling properties in Edinburgh and Leith and most other estate agents are seeing the same thing.
Is that a good thing? It is a good and a bad thing to be honest. If you are looking to sell and then move up the property ladder (buy a larger more expensive home) then achieving a sale price of 10% above your valuation looks fine until you discover that you will probably need to offer 10% above the more expensive property you are looking to buy next.
What is a closing date?
Anyway, enough background. What is a Closing Date? It is best explained by giving you an example of a typical situation:
So, imagine that you own a 2 bedroom flat in Leith and have instructed our firm to do the marketing and selling – thank you for that. The Home Report value is £180,000 and your goal is to achieve the best possible price and to sell in the shortest possible time. From experience, that is most peoples’ goal and in 2016 it made that goal achievable as (as mentioned above) in 2016 there have been more buyers than sellers.
So we put your Leith flat on the market with an asking price of offers over £175,000 and there are open viewings on Thursday evenings and Sunday afternoons. Your property is seen by the buying public on the ESPC, Zoopla etc and also on our website, then the number of requests for more information and for viewings looks very encouraging.
On Thursday you get 8 people round to view and on Sunday you get 14 people round. Yes, be prepared to get that many people come round. On Monday morning our phones start ringing. By the end of Monday, solicitors for 3 of the viewers have noted their client’s interest and by the end of Tuesday the number of notes of interest have increased to 7 and two of the solicitors have made verbal offers at prices above the Home Report value.
You are naturally very excited by all of this and your question to us will be: What do we do now?
Answer: We set a Closing Date.
Why? To allow all 7 interested buyers to put in their best and final offers. This is the strength of the Closing Date system from the seller’s point of view. None of the interested buyers will know what the others will be offering; they will be offering blind. All they will have to go on is the Home Report Value, their solicitor’s experience in the current property market for guidance and the limiting factor of their budget. And this usually means that offer prices will be over the Home Report Value.
So, we have set the Closing Date for Offers for Friday at 12 Noon and during the Friday morning, we receive 7 written offers from the solicitors acting for the 7 interested buyers. We then collate the information from those 7 offers, ranging them according to offer price (from highest offer to lowest) and then by Date of Entry and if we have that information about the buyer’s situation (whether they are first time buyers or sellers with a property still to sell, etc) and present that information to you. And you make the decision of which of the 7 offers you want to accept.
Usually you will choose to accept the highest offer, although you are free to choose to accept whichever offer you wish.
So that’s really all there is to it. We set a Closing Date when there are multiple buyers looking to buy a property as this gives all the buyers the chance to make an offer and from your point of view, as the seller, gives you the best chance of getting the highest price for your property.
If you are thinking of selling your property, then as estate agents and solicitors based in Leith and primarily focused on the Leith and Edinburgh property market, we would be more than happy to discuss the selling process with you and a little more about our estate agency and conveyancing services.