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According to Edinburgh solicitor estate agent Warners, the Scottish property market has been fundamentally changed by the recession and the introduction of Home Report legislation – making huge "offers over" premiums a thing of the past.
Warners believes that Home Reports in particular have created a greater sense of realism among buyers and sellers across Scotland, as they are now able to use property valuations contained in the reports as a marker when judging how much to buy or sell a home for.
And the firm says that, although "offers over" prices will eventually return to the market as competition increases for property in Scotland, sellers are unlikely to ever see a return to the peak scenario in 2007 where they enjoyed premiums of 25% or higher.
Scott Brown, estate agency partner at Warners, said: "Over the past year, we have seen offers over prices dwindle in Scotland as more sellers have chosen to market their properties using 'offers around' instead.
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"This trend was helped by the introduction of the Home Report legislation, which meant that prospective buyers could view the valuation of a property that was included with each report and make a judgement on how much to offer for it - rather than having to make a 'blind' offer above the price quoted by the seller.
"However, I do not think that this has killed off the offers over system for good. The property market is continuing to improve and we are already seeing offers over prices returning in some areas of Edinburgh; particularly when properties sit around a Stamp Duty threshold."
Mr Brown said sellers' expectations over the values they expect for their homes are changing. When the market was at its peak in 2007, many people would deliberately set a low offers over price on their property and would not accept an offer unless it was at least 25% higher than that price.
He continued: "It was a situation that created a lot of confusion among buyers and meant that sellers had an automatic expectation for huge premiums on their properties.
"With the Home Report legislation now firmly established in the Scottish property market, I do not see this situation returning. While offers over has traditionally been the most popular way of marketing properties and it is likely to become popular again, the premiums achieved on these sales will be much less than they were during the peak."
The estate agency partner said that if competition returns to the market, house prices are likely to increase as prospective buyers try to outbid each other to secure a new home. In some instances this could lead to properties achieving bids far higher than the price they are marketed at but he adds that this will be an exception to the rule rather than an expectation.
He added: "I think we have seen a fundamental change in the property market over the past year. There’s more realism in the market and buyers are becoming cannier when it comes to searching for a home, so I don’t think there will ever be a situation again where you'd be expected to pay at least a 25% premium to secure a home – regardless of how much the market has recovered."
(GK/BMcC)
