To some it’s a way to make a quick sale, for others it means paying the right price for a property becomes more difficult. Whatever your point of view, open house viewings are increasing in popularity, particularly in inner city areas such as London where property comes at a high premium.
The way it works is this: Rather than have individuals coming round and viewing the property by appointment over several weeks or months, potential buyers have a short window of opportunity in which to see and then bid on a house or flat, ranging from a whole day to just a few hours. Once they’ve had a look around they are allowed to submit sealed bids to the owner who can then choose the best price.
A London fad?
Whilst it is undoubtedly a favourite way of selling a property down in the south of the country, particularly London and the Home Counties, open house viewings are not entirely the province of the higher cost end of the market. Popularity is spreading across the UK and cities and large towns are adopting it as the way to make a quick sale at the best price. According to recent reports, in London over a hundred people can turn up for one viewing of a single property for a hectic hour or two whilst everyone looks over the place.
This way of selling a house was made popular in the US and Australia and works best where there is a lot of interest, for instance, in an area where housing is in short supply and there are plenty of potential buyers.
Rise in property values
Although we are largely out of the recession, house prices are recovering at different paces throughout the country. The success of open house viewings depend on there being a vibrant, healthy market and even in London, where the market prices have stalled recently, there are more and more instances of estate agents and sellers opting for this quick sell strategy. Whilst the rise in property prices may well be a factor, it is actually the growing difference between the low number of available properties and the high number of potential buyers that has contributed to its success.
The benefits of open house viewings
- It saves time for the vendor because everyone comes round at once to view the property.
- It creates a certain level of competition between buyers as they try to outbid each other for the property.
- Buyers will often pre-empt the bidding process when they know a property is coming up for an open house viewing by putting in a bid for the sale, making the selling process even quicker.
- In places where there is a shortage of supply it can lead to the vendor getting a much better price on the property than they would under normal circumstances.
The problem for buyers, of course, is that open house viewings put them under a lot more pressure to come up with a better price than everyone else and it can lead them to spend more than they originally intended. Some buyers just find the whole process far too intimidating to take part and there is some debate as to whether the best buyers, those with the right amount of finance behind them, are put off by the free for all scramble.
How to bid at an open house viewing
Even with the average property price in London around £360,000, there is still plenty of competition for properties in the capital, especially when they are close to vital amenities such as rail, work and shopping districts.
With buyers outnumbering sellers by as much as 15 to 1, it’s very important that you do your homework in the first instance – look at the area that the property is in and compare the prices so that you don’t end up bidding over the odds, and check all the estate agent details so that you are sure the place is right for you. You need to put in a realistic bid for the property and whilst going £20,000 or so above the asking price is not uncommon, you will find it difficult to get a mortgage if you are paying way over the odds.
Increasing your chances of success
First of all, it doesn’t help to panic. If you are so desperate to buy a property that you find your bank card twitching in your pocket as soon as you step through the door then you might like to think twice about attending an open house viewing in the first place. Viewing time is going to be limited, even if there are appointment times within the opening period – these often overlap and a viewing can quickly descend into chaos if not organised properly.
Success is not just about putting in the winning bid for the product, it is about making sure that you have a property that is fit to live in. With such a short time to view, you need to keep an eye open for problem areas so that you can assess the property with a keen eye rather than discover at a later date that you have to invest more money to solve a number of problems such as damp or a substandard electrics.
Dropout rates are big
With the panic to get the winning bid on many properties, there is a good potential for dropouts. People suddenly find that they have overstretched themselves and don’t have the finances or can’t get the mortgage, putting you back to square one. Vendors also need to be sure that the property is up to scratch. You are going to have a large number of people visiting at one time and if one of them spots a big problem such as an ill-fitting kitchen then you may find the expected price starting to dip as buyers factor in how much extra they are going to have to spend.
Organised properly, open house viewings can actually benefit both vendors and buyers. It gives potential buyers the opportunity to put in a bid and get a quick response compared with other methods of buying a property. For the seller it often offers a fast and convenient way to dispose of a property and perhaps get a better price than would otherwise be expected.