Most people have a stereo-typical image of an estate agent as being a shiny-shod, sharply dressed self-obsessed, fast-talking charlatan, expansive with asking prices and expensive with fees, looking for a quick sale and a fat commission.
Is this fair? Because as vendors we absolutely need them, but to get in with a good estate agent you need to get your head around the jargon.
#1 Offers In Excess Of (OIEO)
An ‘Offer In Excess Of’ is a common trait that implies that you will need to pay over the advertised figure, regardless of whether the property is worth it. Usually displayed as £250k OIEO or £250k Offers In Excess Of.
It generally indicates a vendor who doesn’t want to accept the estate agent’s valuation of the property, refuses to negotiate, and the OIEO is the lowest price which they will accept.
Of course, that’s up to them, right? But who likes to be told to pay more for something? And baffling buyers with acronyms is confusing and off-putting to some people.
But if your intention is to bid below, then go ahead and do it, you have nothing to lose.
There is a right time to use OEIO; when the vendor is trying to create a huge amount of interest over a short space of time. The price needs to be low enough to spark buyer interest, and low enough that buyers understand that it will likely go for more.
#2 Offers In The Region Of (OIRO)
This gives the buyer a rough idea of the asking price: the vendor would prefer something higher but there is room for negotiation for the buyer.
If there is a lot of interest in the property with several buyers competing for it, there is a higher chance that the vendor will achieve a price over and above the asking price. If the buyer offers a low price, they will likely lose out to a higher bidder. That makes sense right?
The question is how do you know what to offer on a property that is OIEO or OIRO?
Competition: How quickly does the seller need to sell? How many other interested parties are there? If the seller is strapped for cash and needs to make a quick sale, they are more likely negotiate on price.
Expectation of the vendor: Even if the vendor wants a specific price, it doesn’t necessarily mean that the property is worth it. Too high an expectation could result in the property sat around on the market for too long.
Paying asking price: An educated investor does the homework, works out the numbers and will know if the property is competitively priced. If they can spot a refurb opportunity, they will know whether to bid above or below the asking price. And don’t be afraid to test the waters by suggesting a price, without actually making an offer. You will be able to gage from the agent if a low offer would be taken seriously or rejected.
At the end of the day, a property is only worth what you’re prepared to pay for it right?
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