What does OIRO mean? What does OIEO mean?
Do you know that when you see a property marketed at a price with the abbreviation OIEO or OIRO afterwards, there are potential opportunities to be had?
You may have seen these abbreviations on some online property portals. Or, perhaps you’ve seen them in estate agents’ windows or within their marketing materials. Either way, you may have not really given much thought to how you can benefit.
Here we explain what OIEO and OIRO mean on paper; what these abbreviations really mean to the seller; and how, as a result, you can buy a property well.
Do you know what OIEO means? OIEO explained
OIEO is an abbreviation of the phrase ‘Offers In Excess Of’. This suggests that the seller will only accept offers over and above the price listed – whether the property is worth the extra amount or not. In many cases, vendors use it as a way to start the asking price very low. It is designed to entice you in.
Do you know what OIRO means? ORIO explained
This is an abbreviation of ‘Offers In The Region Of’. It suggests that the seller is willing to negotiate on the price – either up or down.
Why do vendors price this way?
It’s all about economics – where demand is high, this pushes up the price. It’s the typical “join a queue” scenario because when others want a property, then everyone wants it!
Generally, it means that the buyer is motivated to sell and is open to negotiations. They are prepared to start at a low or competitive market price to generate interest from buyers.
This is backed by recent research showing it really is a buyers’ market:
- in May this year, 81% of properties sold were for below the listed price
- last month, Zoopla reported that homeowners are having to shave an average of £8,000 off asking prices to get properties sold.
What are the reasons behind the sellers’ motivation?
There are many reasons why a vendor is motivated to sell – and not just because it is such a competitive market. For example, they:
- are facing repossession and need a quick sale. (Repossessions are on the rise after decades)
- are due to exchange on another property, and their current vendor has pulled out at the last minute. (One in five sellers see their property chain break, costing an average £3,000 and lots of stress)
- are relocating for work. (A study last year showed that nearly two-thirds of Brits are open to moving overseas for work)
- have inherited a property or are divorcing and want to get rid of it and divvy up the money as quickly as possible.
How can you use this?
As an investor, you are not in a chain. You can be flexible in terms of completion dates and are perceived as a cash buyer – all of which is very attractive to motivated vendors.
Because the seller is motivated, you need to find out the reason why and be the one to offer them a solution.
If, for example, they need to complete quickly, then assure them that you can facilitate the transaction swiftly.
Get a mortgage pre-approved and offer to be flexible.
Remember, their motivation might not simply be a financial one. Speed, flexibility, and reducing stress can be great incentives for a motivated seller. The upside for you is that means you can use this to negotiate a better price but still make sure everyone wins.
Do your due diligence
Of course, no matter how good a deal seems, make sure you do your due diligence, and you aren’t pressured into something.
Remember, just because the seller is asking for a specific price, it doesn’t necessarily mean it’s worth that amount. Make sure you know whether to pay ‘under’ or ‘over’ an amount.
In a nutshell, whether the property is marketed as OIRO or OIEO, it is only worth what you are prepared to pay for it.