A Guide to Sealed Bids

According to a new report from Stacks Property Search & Acquisition, despite low property transaction levels, a significant number of properties are still going to sealed bids.

But what are sealed bids? What is the process? And how can we ensure that your bid wins the property?

What are Sealed Bids? What’s the Process?

Sealed bids are a bidding method used when there is high demand for a property. It’s often used for a ‘special’ property.

It may be a property with compromises, or one with many potential uses, and agents don’t only use sealed bids for the top dollar property; it’s a method of sale used across all price brackets.  

The process involves sending in your written offer for the property with supporting evidence by a set deadline. The vendor and/or their estate agent then open all the bids at the same time and choose their preferred bidder solely based on the information provided therein.

Back in the day, the bids would all be in sealed envelopes, hence the name Sealed Bids

Sealed bids are a very specific process of putting an offer on a house. You only get one chance to give your offer, unlike the traditional method where an offer could get rejected, and you have an opportunity to make a new one. You also don’t know what other people have offered, so it’s harder to benchmark your offer. 

Sealed Bid Tips and Tricks 

Working in the property market for over 40 years, we have faced sealed bids many, many times. 

The key to formulating a strategy in Sealed Bids is to understand that the current system is impossible to predict. Submitting the highest bid won’t necessarily secure the property; the vendor and agent will weigh up all the information and make a choice based on 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, and you can still be gazumped – as in any purchase – right up until exchange.

If you do find yourself in a sealed bid situation, you can only put your best foot forward.  The following advice may help:

1: Follow the Rules – Read the ‘rules’ that will be issued by the estate agent carefully and adhere to them. These may be different from vendor to vendor, so even if you have been through the sealed bids process before, don’t assume you know how this particular process works. 

2: Talk to the Vendor—Try to get the vendor to accept an offer before it goes to sealed bids. If you negotiate properly and sensitively, you could avoid a sealed bid situation. 

3: Don’t Hold Back—Your bid needs to be the top price you would be comfortable paying. Base it on this rather than on what you think you need to pay to secure the property—it’s not like a regular house offer; you only get one chance.

4: Consider Your Entire Offer – The bid itself is important, but the dressing of your offer is equally important. Demonstrating your commitment, proceedability, ability to exchange quickly, flexibility of terms can all work in your favour. Be prepared to enter a beauty parade as well as a bidding competition. Vendors can choose their buyer; cash is king, but failing that, a buyer who has documented proof that they have immediate access to funds will move up the pecking order.

5: Do Your Research on the Vendor—Your bid won’t only be judged on the amount; it will also be judged on how easy you’re going to make it for the vendor. The more information you have about the vendor, their motivation, and their needs, the better. Then, tailor your presentation to fit.

6: Get a Survey Done—If you can get this done before the date for sealed bids, your offer doesn’t have to be subject to a survey. Again, this will make your bid very attractive.

7: Attach a List of Advisors – solicitors, finance providers, etc will further reassure the vendor.

8: Quiz and Badger the Agent to Get Information – It helps to know how many other bidders there are, where they come from, and what else they’ve been looking at. Agents cannot discuss bids — but they can reveal how many bidders there are and what offers were made before the auction.  All this may help you assess how the bids are likely to turn out

9: Be Patient – Don’t expect an immediate result – you may well not hear the outcome for three or four days, so spare yourself the pacing and stressing.

10: Enlist the Support of a Buying Agent—A buying agent is on your side and can help you with sealed bids. Contact Stacks if you require advice and support. 

Stacks and Sealed Bids 

At Stacks, we have helped several clients with sealed bids and other house-buying processes. Sealed Bids are a badly outdated system that would benefit from being 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.  

However, until these improvements materialise, your best ally will be your local Buying Agent; for more about how we help clients in all competitive situations, including Sealed Bids, click here.

 

As seen in:

Property Reporter:  Top Tips for tackling Sealed Bids

Estate Agent Today: Sealed bids: buying agent says process should be more transparent

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