"under Offer"

[Our day will come]

I was back in Scotland visiting family last week and I noticed that numerous properties were marked "under offer".

As far as I know, once an offer is made and accepted in Scotland, the property is sold, unlike England.

I couldn't resist it, so went into an estate agents and had the following conversation:

Me: "Hello, what does "under offer" mean?"

EA: "Oh, it's, like, er, when, an offer has been made but the missives of sale haven't been completed yet..."

Me: "So, has an offer been made and accepted?"

EA: "Er, what property is it you're interested in?"

Me: "No, I'm just wondering generally what "Under offer" means".

EA: "Well, it's before the missives have been concluded."

Me: "So an offer has been made and accepted?"

EA: "Er, Yes, but which property is it you're interested in?"

Me: "So if an offer has been made and accepted, the property is sold, no?"

EA: "Er, yes. But if you tell me which one you like maybe we can discuss it."

Me: "Wouldn't that be a waste of my time since the properties marked "under offer" are sold?"

EA: "Oh no, we can still talk about them..."

Has this been discussed before on here - it is a blatant attempt to talk up the market isn't it? How can that be legal? Or do they mark as "under offer" any property which has received an offer, even if that offer is rejected?

Edited July 25, 2009 by Our day will come

[TTD]

"As far as I know, once an offer is made and accepted in Scotland, the property is sold, unlike England"

No, someone's been misleading you.

Once an offer is accepted, the solicitors on each side work toward 'conclusion of missives' - the missives are the letters exchanged between them, starting with a 'qualfied acceptance' from the selling solicitor in response to the offer from the buyer.

When the final exchange of letters or missives takes place between the two, the 'bargain' has been made, and that's when the house is effectively sold.

When an offer has been accepted, there's nothing to stop an agent taking your details in case the sale falls through before missives are concluded, as the agent seems to have been doing above.

Read this , -; by The Law Society of Scotland

Negotiating the Sale.

...This exchange of letters signed by the solicitors is referred to as "missives". Once their terms are finally agreed there is a concluded and binding contract.

The Paperwork

Further checks have to be carried out by solicitors after an offer has been accepted, for instance .....

Edited July 25, 2009 by TTD

[Our day will come]

"As far as I know, once an offer is made and accepted in Scotland, the property is sold, unlike England"

No, someone's been misleading you.

Once an offer is accepted, the solicitors on each side work toward 'conclusion of missives' - the missives are the letters exchanged between them, starting with a 'qualfied acceptance' from the selling solicitor in response to the offer from the buyer.

When the final exchange of letters or missives takes place between the two, the 'bargain' has been made, and that's when the house is effectively sold.

When an offer has been accepted, there's nothing to stop an agent taking your details in case the sale falls through before missives are concluded, as the agent seems to have been doing above.

Read this , -; by The Law Society of Scotland

Negotiating the Sale.

...This exchange of letters signed by the solicitors is referred to as "missives". Once their terms are finally agreed there is a concluded and binding contract.

The Paperwork

Further checks have to be carried out by solicitors after an offer has been accepted, for instance .....

Thanks. So this distinction that is often drawn between the English law concept of offers "subject to contract" and Scots law is a misnomer? So gazumping/gazundering can happen in Scotland too?

Edited July 25, 2009 by Our day will come

[Democorruptcy]

We looked at a property last December that went under offer around February. In March it came back on the market and we went and had another look but again decide it wasn't for us. We sent an email to the agent telling her we weren't interested. A few weeks after that I received this email from the estate agent:

"I refer to previous correspondence re the above addressed property and now write to advise that we have received an offer on the property that the seller is giving consideration to.

As we have another note of interest and you have expressed an interest in the property, the seller has asked that we contact everyone to find out what their position with regards to making an offer or not, in order for her to make an informed decision."

So the agent was trying to encourage us into a at least a bidding war or to gazump the potential buyer, if the offer had already been accepted. Out of curiosity I replied asking how much the offer was for and she said she couldn't tell me but it wasn't the asking price.

These estate agents can be a bit tricky. I have a friend who in 2006 saw a house at offers over £170k. He offered £180k the agent told him someone else was interested but the owner said they would accept £190k so he said OK then £190k. The agent then phoned him straight back and said it was going to closing date! He liked the house but was then worried that the other people (if they existed) would know he had offered £190k. He put a bid in for £201k and got the house. When surveyed it was valued at £170k.

[TTD]

"So gazumping/gazundering can happen in Scotland too? "

Um, no.... don't think that's what I said.

If an offer is accepted, the property is placed Under Offer and whilst agents can take details from other possible buyers in case the sale falls through, they shouldn't be accepting other offers unless the first one is rejected.

See another law society note here - with the relevanat paragraph -

"Where a solicitor for a seller has intimated verbally or in writing to the solicitors for a prospective purchaser that their client's offer is acceptable - whether after a closing date or otherwise - the seller's solicitor should not accept subsequent instructions from the seller to accept an offer from another party unless and until negotiations with the original offeror have fallen through. The solicitor should advise the seller to instruct another solicitor if he wishes to accept the later offer. "

[Our day will come]

"So gazumping/gazundering can happen in Scotland too? "

Um, no.... don't think that's what I said.

I didn't say you said it, was just trying to clarify what you meant.

As far as I understand it then, and consistent with my original post, once an offer is accepted in Scotland, that's it. There can be no other offers accepted, notwithstanding the fact that the missives have not yet been completed.

Therefore, the concept of "Under offer" is a misnomer in Scotland. Effectively the property is sold when the offer is accepted, unless it subsequently falls through.

This should be distinguished from England where "Under offer" and "subject to contract" have another meaning entirely.

[Gigantic Purple Slug]

I'll sure this has been said on this site before. But since it irritates me so much I'll say it again.

In England the sales process is boolean in nature. Houses are either For Sale or Not For Sale.

Under Offer, Sold Subject to Contract, Offer accepted assuming my cat eats its dinner =For Sale.

Not For Sale=Not For Sale.

[Fergie]

As far as I understand it then, and consistent with my original post, once an offer is accepted in Scotland, that's it. There can be no other offers accepted, notwithstanding the fact that the missives have not yet been completed.

Therefore, the concept of "Under offer" is a misnomer in Scotland. Effectively the property is sold when the offer is accepted, unless it subsequently falls through.

As far as I understand it, where solicitors are concerned, there is a kind of gentleman's agreement that once an offer has been made and accepted, and the missives are underway, there should be no further offers. Most solicitors will not take them, as mentioned above. But it's not actually written in law that you can't gazump. If you have a solicitor that doesn't play by the rules, or you go above your solicitor, the buyer has no legal comeback, as the contract isn't binding until all the missives are complete. It's a system which works mostly on trust, and on lawyers and solicitors (and estate agents) playing by those unwritten-in-law rules about the verbal contracts being binding. It obviously works though, as gazumping never does tend to happen.

An EA taking details in case the sale falls through is a different thing. Given the way the market and mortages are right now, with large numbers falling through, they'd be incompetent not to take your details.

[Scunnered]

As far as I understand it, where solicitors are concerned, there is a kind of gentleman's agreement that once an offer has been made and accepted, and the missives are underway, there should be no further offers.

A few years ago at the high-point of the feeding frenzy in the housing market there were a few reports about a rise in gazumping in Scotland, which I think they blamed on buyers from England who didn't understand the local procedures pressurising their solicitors to overlook this gentleman's agreement (can't find any links unfortunately.) It looks as if the Law Society of Scotland have been trying to tighten things up: Gazumping, Gazundering and Closing Dates.

In the light of increasing concern both within and outwith the profession about the integrity of the system of offer and acceptance for houses in Scotland, the Professional Practice Committee have reviewed the existing Practice Guideline on Closing Dates and Notes of Interest. (See Article 9 Code of Conduct)

The Committee were particularly concerned about the increasing frequency of both gazumping and gazundering. The following Practice Guidelines have been approved by the Council of the Society:

Where a solicitor for a seller has intimated verbally or in writing to the solicitors for a prospective purchaser that their client's offer is acceptable - whether after a closing date or otherwise - the seller's solicitor should not accept subsequent instructions from the seller to accept an offer from another party unless and until negotiations with the original offeror have fallen through. The solicitor should advise the seller to instruct another solicitor if he wishes to accept the later offer.

This Guideline extends the guideline on Closing Dates to a situation where no closing date has been fixed.

[continues]

I don't see a date unfortunately. It looks as if it's still a gentleman's agreement, but they'll frown at anyone who tries to misbehave.

Edited July 25, 2009 by Scunnered

[Scunnered]

Ah, here's a story about the rise of gazumping in Scotland from the Scostman in 2004: http://thescotsman.scotsman.com/scotland/F...-the.2513756.jp.

THE spectre of dirty tricks is seeping into the Scottish property market, with almost one in five buyers saying they would be prepared to drive down the agreed price at the 11th hour to save money, The Scotsman can reveal.

The practice, known as gazundering, is typically associated with the housing market in England, where double-dealing and skulduggery are endemic.

...

[EA says]

"Until now we have been able to keep our system pretty honourable but there are signs that buyers and sellers are becoming much more commercial. People are moving up from the south who are trying to bring their understanding of how their property market works to ours.

"I am concerned it could break down the fabric of our system."

[TTD]

As far as I understand it then, and consistent with my original post, once an offer is accepted in Scotland, that's it. There can be no other offers accepted, notwithstanding the fact that the missives have not yet been completed.

Therefore, the concept of "Under offer" is a misnomer in Scotland. Effectively the property is sold when the offer is accepted, unless it subsequently falls through.

The bit you've added to the original post is the "unless it subsequently falls through" .... my point of view is that whilst an offer may have been accepted, the property is 'under offer' until missives are concluded - i.e. there's still the possibility that the buyer may lose their finance, or that some element of the sale may cause buyer or seller to pull out.

IF everything goes by the numbers, then the property is, essentially, sold once the offer is accepted, but not legally sold until the missives are concluded.

I don't see why it's a misnomer. The agents can't describe it as sold when the legals haven't been concluded.

[bailey]

You are seeing a lot more 'Under Offer' now and property kept on the market instead of solds and property being removed.

There are a couple of reasons. As already said more properties are falling through so agents have to keep taking names of someone who may be interested in case that happens.

Also if a property is removed from the market for 4 weeks or more it needs a new (or refreshed) home report if it comes back on.

[catmandu]

I believe it's more than a gentleman's agreement. If the sale falls through because the buyer changes their mind after the offer is accepted, the seller is entitled to sue them for expenses, e.g. re-advertising costs.

What percentage of people actually go to the trouble of suing I don't know and I'd be interested if anyone has any info on that

[TTD]

I believe it's more than a gentleman's agreement. If the sale falls through because the buyer changes their mind after the offer is accepted, the seller is entitled to sue them for expenses, e.g. re-advertising costs.

What percentage of people actually go to the trouble of suing I don't know and I'd be interested if anyone has any info on that

Do you reckon the same applies in reverse? If the seller pulls out, can the buyer sue them for anything?

[pyracantha]

I believe it's more than a gentleman's agreement. If the sale falls through because the buyer changes their mind after the offer is accepted, the seller is entitled to sue them for expenses, e.g. re-advertising costs.

What percentage of people actually go to the trouble of suing I don't know and I'd be interested if anyone has any info on that

It's not so much re-advertising costs a seller should be worried about, more the selling price of the property if a buyer stalls.

When we started looking at houses in Clarkston, an EA told us they had recently sold 12 Benview Rd (the accepted price being £362k. The house came off the market, missives were being concluded when the buyer ran into difficulties. The house came back onto the market just when the general populace realised things were not good in the housing market. The seller dropped, dropped and dropped a bit more. Eventually the house sold for £278k. (It's on the land register.)

I don't know about you but a loss of £84k would be more of an issue than having to pay for a few more schedules to be printed.

I asked the EA what had happened on the legal side. She replied it was very unlikely the seller would get any financial recompense from the original 'buyer'. I really felt sorry for the seller, a retired widower looking to downsize who got completely screwed over.

[ccc]

It's not so much re-advertising costs a seller should be worried about, more the selling price of the property if a buyer stalls.

When we started looking at houses in Clarkston, an EA told us they had recently sold 12 Benview Rd (the accepted price being £362k. The house came off the market, missives were being concluded when the buyer ran into difficulties. The house came back onto the market just when the general populace realised things were not good in the housing market. The seller dropped, dropped and dropped a bit more. Eventually the house sold for £278k. (It's on the land register.)

I don't know about you but a loss of £84k would be more of an issue than having to pay for a few more schedules to be printed.

I asked the EA what had happened on the legal side. She replied it was very unlikely the seller would get any financial recompense from the original 'buyer'. I really felt sorry for the seller, a retired widower looking to downsize who got completely screwed over.

All depends if the missives had actually been signed or not ?

If not, then whether they were being concluded or not is neither here nor there. Eggs till they hatch and all.

I think....

[bailey]

I believe it's more than a gentleman's agreement. If the sale falls through because the buyer changes their mind after the offer is accepted, the seller is entitled to sue them for expenses, e.g. re-advertising costs.

What percentage of people actually go to the trouble of suing I don't know and I'd be interested if anyone has any info on that

They can only claim compensation if the sale falls through after the missives are concluded. The same is true for New Builds. The builder can claim interest on the money that would have been paid until the house is resold usually at a rate of at least 6% over base bank rate.

[Tim Miller]

All depends if the missives had actually been signed or not ?

If not, then whether they were being concluded or not is neither here nor there. Eggs till they hatch and all.

I think....

This is why all offers are or should be SUBJECT TO CONTRACT! and SUBJECT TO SURVEY. That way you are not and can not be held responsible as a buyer.