What Does Under Offer Mean?

What Does it Mean When a House is Under Offer?

Under Offer means that a buyer has made an offer for a property that’s being considered by the seller.

There is no contract and the sale is not legally binding in any way – very far from it, in fact.

Sellers are completely free to reject the offer (if it’s unreasonable or misaligned with what they feel the property is worth, for example).

Indeed, the term is more frequently used by estate agents to drive the price upwards.  The logic is that marking a property as ‘Under Offer’ will trigger other buyers to get in gear and make higher counter offers.

In most cases, the estate agent will not take the property off the market and continue to show people around.  If another offer comes through, the agent has a legal obligation to present it to the seller (even if it’s lower).

There could then be a few rounds of negotiations between one or more of the buyers.  Once the seller accepts a final offer, the estate agent should mark the property as Sold Subject to Contract (STC).

Under Offer Explained

Preliminary Buyer Checks (After an Estate Agent Changes a Property to ‘Under Offer’)

Meanwhile, to assist with the seller’s decision, a good estate agent will check the credentials of each bidder.

This may involve:

• Assuring the correct finances are in place and that the sale would be proceedable (should the seller accept the offer).  This includes confirmation of who the buyer’s lender is and requesting a valid Decision in Principle (DIP) / mortgage offer (in the last 2 months);
• Confirming the deposit the buyer is paying and whether it correlates with what is stated on the mortgage Decision in Principle (i.e. the deposit / initial equity + mortgage loan = the sale price of the property);
• Or, if the offer is from a cash buyer, confirming the proof of funds;
• Checking that the buyer can afford the stamp duty obligation (Land Transaction Tax in Wales or Land and Buildings Transaction Tax in Scotland) on completion day.

It’s worth noting that the exception here is if a property was sold by auction.  Here, at the fall of the hammer, contracts are effectively exchanged.  The property is therefore effectively sold

What Does Under Offer Mean on Rightmove?

As the UK’s most popular property portal, you’re most commonly likely to see ‘Under Offer’ updates on Rightmove’s listing pages.

In most cases, there will be a small dark grey strip saying Under Offer on Rightmove in the description.  The estate agent also updates the content of the listing with relevant information.

There is no difference to the meaning of Under Offer when it appears on Rightmove.

Most estate agents (including ourselves) have a central management system where properties for sale are uploaded and notifications can be made ‘in bulk’. This means that the notification will appear on Rightmove and the other portals that the agent advertises on.

Can You Make an Offer on a House That is Already Under Offer?

Absolutely…

However, the estate agent will not divulge any existing offer that is under consideration.

If you find the estate agent acting less receptive towards you, it’s worth insisting that they allow you to make an offer.  They have a legal obligation to do so after all.

It’s also common to see agents simply forgetting to change the property listing to ‘Sold STC’ or ‘Sold’.  For example, if a property is marked as Under Offer for more than a few weeks – it usually means that the sale is progressing.

However, with 1 in 3 sales collapsing, there may well be an opportunity to purchase (see below).

As a Buyer, Should I Offer Lower?

It’s entirely your decision to offer lower than the asking price.  Much will depend on the level of demand and your buying position.  If there are a number of bidders, for example, an under asking price offer will often get instantly rejected.

However, if you’re a cash buyer or have another way to buy quicker, the seller may take you more seriously.  Here you will need to show your strength and ability to perform on the sale.

Gazumping a Property That’s Under Offer

Gazumping occurs when a buyer makes an offer that’s higher than the initial offer after the seller has accepted the price.  It tends to happen more in a hot market.

In such scenarios, if the seller accepts the higher offer, it’s the primary buyer that ends up the loser.  They are investing their personal funds and time into the conveyancing process and organising the move.  Suddenly seeing another buyer come into the fray is incredibly frustrating.

Many consider it an unsavoury practice in the property industry.  There is some hope that it may become under heavy regulation.  However, as estate agents, we are required to present the offer even if the sale is underway.

Is Gazumping Ever Justifiable (When a Property is Under Offer)?

In 99% of cases, no.

However, a lot can depend on the circumstances of the sale.  For example, if a buyer is deliberately acting slow or not showing proactivity, it makes sense for a seller to consider other options.  If a legitimate higher offer comes through, the seller is well within his/her rights to go ahead.

In most cases, the delays are often due to the complex nature of the UK house sales process.  Sellers generally do not want to disappoint the existing buyer.  Most indeed are doing what they can to push things forward.  If you find yourself in this situation as a home seller, it’s worth putting yourself in the shoes.

Furthermore, not only would you have your own costs of selling but there’s a risk that the new buyer’s offer could simply be ‘hot air’ and you end up back at square one.  A property that goes back on the market after being ‘Under Offer’ can sometimes be viewed (unjustifiably) with suspicion.

Gazundering a Property That's Under Offer

The practice of gazundering is where an offer for a property is made below the existing one on the table.   It’s also a scam in the quick house sale industry (where homebuying companies drop the price shortly before the exchange of contracts).

An offer in such circumstances rarely gets accepted.  Sometimes, however, an existing offer can collapse and (with no other forthcoming buyers) the seller ends up with not much of a choice.  An example of this scenario could be where the local or national house market is on the decline.

We have seen this happen with a property that’s been under offer and the new buyer has craftily.  Yes, the house sales industry can be ruthless at times.

Overall, we strongly discourage this practice.  Indeed, many agents have their own policies in place.

Can Estate Agents Mislead About a Property Being Under Offer?

It certainly does happen in the industry, particularly when buyers have direct relationships with estate agents.

The most common occurrence is when a property comes to market and the agent unduly influences the seller to accept a lower offer from the buyer.

The estate agent will then either lie about or not disclose any higher offers.  In return, the agent often receives an off-the-books payment (‘drink’ or ‘backhander’ as they are informally known).

This practice is completely illegal and agents that get caught are at risk of being shut down by regulatory bodies (such as the Property Ombudsman and/or the National Association of Estate Agents). There is even the possibility of prosecution and even prison time.

How Long Does a Property Stay Marked as 'Under Offer'?

In theory, a house Under Offer should not stay so for more than a few days.  However, it’s often the case that estate agents do not change the classification until the transaction reaches exchange and completion (and sometimes after).

The estate agent should be able to deal with the offer and undertake the correct due diligence to confirm that the buyer’s offer is serious.  The estate should change the listing to: ‘Sold Subject to Contract’.

In most cases, both the buyer and seller want to get things done as fast as possible.

However, much will depend on how the various processes move forward.  We often see the survey and legal processes tend to cause the most problems.  A good estate agent should help navigate what can sometimes be choppy waters.

Check out our FREE speed of sale tool which shows how long house sales (from listing to completion) are taking on average in your local area.

This is why more people are choosing the Sell House Fast option as this effectively bypasses many of the issues that frequently appear.

In our own experience, we’ve also seen solicitors omitting key information after the offer has been accepted.  One common example is lease length – an issue that is subsequently raised by the solicitor

How to Be First in Line if a House Comes Back to the Market

As mentioned above, with many house sales collapsing, it’s always worth keeping an eye on the property.

Here are some pointers to put yourself in the best position:

• Let the estate agent know that you’re keen to buy.  You may want to drop them a quick email or phone call every week;
• Make sure you have Rightmove and Zoopla alerts set up which will notify you if the property comes back to market;
• Set up an alert on your Calendar with a link.  The agent will update the listing and remove ‘Under Offer’ or ‘Sold STC’;
• Make sure you’re in a solid position to move forward with the sale.  For example, make sure your mortgage Decision in Principal (DIP) has not expired;
• See if you can get into a position to get more capital together to effectively become a cash buyer and you’ll probably be in a stronger position.

I'm in a Chain, Should I Make an Offer on a Property?

Whilst it’s common for people to buy and sell houses at the same time, making an offer on a property often depends on how far you are in the chain and its complexity.

For instance, if you and the others in the chain have completed the survey stage, mortgages have been approved and the are no legal concerns, it’s usually fine.  Here, you’ll essentially need to be sure of how certain things are.

If, on the other hand, you or any of the others in your chain are early in the process, your offer may not be taken seriously.  This is because of the inherently slow nature of the house sale system in the UK.

Generally speaking, therefore, it’s best to be in a no onward chain position.

Why Property Solvers Do Not (Normally) Mark Homes as Under Offer

With the confusion between the definitions of Sold Subject to Contract (SSTC) and Under Offer, we tend to avoid marking the properties we sell as ‘Under Offer’.

In our experience, buyers can often think that the term means sold and will not express interest (even though the seller is open to receiving offers).  This gives us the opportunity to show the property (taking offers 24/7) to other prospective buyers and, potentially, achieve sellers a higher price.

It’s also easy to make a high price offer.  We frequently come across ‘buyers’ who are, frankly, time wasters.  There is even evidence of other estate agents making higher offers in an effort to steal clients.

Buyers may think that there’s something wrong with the property if it returns back to the market after having been marked as Under Offer.

Some agents argue that it helps refresh the listing to the top of the page, but we have other ways of doing this.

Our seller clients often prefer that we do things this way and not give the market potentially mixed messages.  As a result, we only change listings to SOLD STC when the buyer has shown clear commitment and, crucially, has their ducks in a row.

Sold STC, in our view, is more concrete and lets the market know that the property is no longer available.

Note that we would still choose SSTC even with the modern method of auction service.  If our client selling via auction.

What Does Under Offer Mean in Scotland?

With the sales and conveyancing process operating differently from that of England and Wales, the term Under Offer has a more definitive meaning.

The buyer’s solicitor makes an offer in writing and when the property is marked as ‘Under Offer’, the seller has effectively accepted.  Although the sale is not yet legally binding, it’s generally taken more seriously.

The Scottish conveyancing process involves Missives, a collation of the necessary legal paperwork to buy and sell property or land.

Instead of Sold STC, the Scottish legal system uses the term Sold Subject to Conclusion of Missives (SSTCM).  Under Offer therefore effectively means that the solicitors are working towards concluding the sale.  The buyer would also typically organise mortgage finance and survey.  Once the missives are complete, the sale becomes legally binding.

In our view, as a result of these mechanisms, the Scottish system arguably has a better way of dealing with the issue of gazumping.