Offers in Excess of (OIEO) Explained
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Offers in Excess of (OIEO) Explained
If there’s one thing you can be sure of when it comes to selling your property, it’s that you’re going to run into many acronyms—OIEO being one of them. Read on to find out what offers in excess of (OIEO) really means, how listing your property with an OIEO price works and the pros and cons of doing it.
Offers in excess of—or OIEO—means that, as a seller, you’re asking for offers on your property over and above the price stated. It’s different to a typical guide price, where buyers might offer less at first and potentially negotiate from there. Using OIEO pricing tells buyers you’ll only consider offers above the stated price. It’s also sometimes referred to as ‘offers over’.
Offers in excess of (OIEO) vs offers in the region of (OIRO)
Offers in excess of means as a seller, you’re looking for offers of at least the stated price or higher. Offers in the region of means you’re open to negotiating both lower and higher than this price. Typically, potential buyers see most property prices as guide prices or OIRO prices unless OIEO is stated.
As a seller, any offers you receive on your property from potential buyers will be over and above the price you’ve listed. Once you’ve accepted an offer you’re happy with, the rest of the conveyancing process will work exactly the same as any other property sale.
Here are a few reasons you might choose to market your property with an offers in excess of price.
1. To guarantee you a minimum sale price
If you’ve worked out exactly what you need to make from your property sale, to cover all your estate agent fees, legal fees and onward property purchase, you’ll probably have a minimum figure in mind that you need to get from your buyer. In this case, using OIEO pricing removes pressure on you to enter into negotiations that fall below this threshold. You can save time by filtering out potential buyers who can’t afford to meet this price.
2. As a price compromise
Does your estate agent value your property at less than you think it’s worth? If so, you can compromise by listing the house at the price they suggest, but with OIEO next to it, to show buyers you’re not willing to go any lower than that (and would prefer bids over this). This approach can also work when your property is hard to value - perhaps because it’s not been sold for a few decades or there aren’t similar houses in the area to compare its value with.
3. To generate more interest
Want to get your property sold fast? One tactic is to market your house with an OIEO price lower than its market value, meaning it’s a very competitive price that will grab attention. Buyers will perceive this as a good deal and hopefully you’ll see more offers (above the listed price) as a result.
While offers in excess of pricing can be great for sellers, it can also have the undesired effect of putting off potential buyers.
Firstly, it can suggest there isn’t room for negotiation, which may deter buyers from making an offer. From a psychological perspective, it could make them feel like they aren't getting a 'deal' and are paying over the market value (even if this isn't true).
In addition, all buyers have a budget and will search for properties around that price. This works with typical pricing because they know they’ll probably get an offer accepted at the property’s guide price or less. But with OIEO pricing, you're stating you will only accept an offer if it's above your marketed figure. This may either price you out of their budget or put them off.
OIEO pricing can also encourage bidding war situations, where multiple buyers increase their offers to try and outdo one another. Again, while this is good news for you as a seller, it can have the opposite effect on buyers who want to avoid getting into this scenario.
This depends on the market conditions, your location and the property itself. As a general rule of thumb, you can expect offers at least in line with the price you’ve provided. When it comes to what they offer you, potential buyers will likely be assessing what properties similar to yours are selling for and taking this into account, as well as their budget. Doing your own research will help you manage your expectations and assess your offers in the context of the current market.
As with all property sales, it’s important to carefully consider the offers buyers make you. And remember, the ‘best’ offer might not necessarily be the highest-priced one. Chain-free buyers with a big deposit who are keen to move quickly could be worth much more than a relatively small increase in offer price from someone in a less desirable position.
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