“Sealed bids are a device used when demand significantly exceeds supply, especially for a ‘special’ property”, says George Barkes of Stacks Property Search & Acquisition’s Cotswolds office. When there are three or more parties interested in a property, purchasers are often invited to submit their best and final offer by a certain time and date. Despite low property transaction levels, we are seeing a significant number of properties going to sealed bids.
“Agents don’t only use sealed bids for the top dollar property; it’s a method of sale used across all price brackets. But it’s a badly outdated system. In our view, they should be restructured, formalised and made more transparent. Buyers should have to prove they can proceed in advance, and like an auction, a winning bid should be financially binding.
“The current system is virtually impossible for a buyer. Submitting the highest bid won’t necessarily secure the property; the vendor and agent will weigh up all the information and make a choice on the basis of the size of the offer AND the situation of the buyer. And because it’s not a legally binding decision, if another buyer appears with a higher or better offer, it may all change.
“If you do find yourself in a sealed bid situation, the following advice may help:
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