Sealed bids are a device used when demand significantly exceeds supply, especially 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. It involves sending in your written offer 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.
The key to formulating a strategy in Sealed Bids is in understanding 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 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 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: Read the ‘rules’ that will be issued by the estate agent carefully, and adhere to them
2: Try and get the vendor to accept an offer before it goes to sealed bids
3: 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.
4: The bid itself is important, but equally important is the dressing of your offer, demonstrating your commitment, proceedability, ability to exchange quickly, flexibility of terms. 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: 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 needs, the better, then tailor your presentation to fit.
6: Get a survey done before the date for sealed bids, so your offer doesn’t have to be subject to survey. Again, this will make your bid very attractive.
7: Attach a list of advisors (solicitors, finance providers etc) which 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, 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: 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.
It’s a badly outdated system, which 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. Until these improvements materialise however, your best ally will be your local Buying Agent, for more 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
Should you try and gazump on a house? Nobody likes a gazumper – even the selling agents who stand to make more money out of a bigger deal. But they know that gazumping causes huge disruption, and risks the deal going badly wrong. A gazumper is most likely to be a disorganised...
Confused by the property phenomenon of “off-market property”? Consider this. An estate agent rings you and asks if you would like to view a property. You ask them to send you the particulars, but there aren’t any. You look it up on their website – but it’s not there. Are there...
As seen in The Sunday Times 26/3/17 The Return of the Chain …”What is new, according to James Greenwood, managing director of Stacks Property Search, is that people are househunting without putting their own property on the market. “This is a symptom of a severe lack of homes on the market in...
Call us on +44 (0) 1594 842880 or complete the form below
When making probably the most important financial decision of your life, it pays to have the right advisors at your side.
Retirement or semi-retirement is an exciting stage in life. Finding the right home to live in and enjoy it to the full is important. We know that and will do all that we can to understand what you’re looking for… before starting to search. And search we will, until we find the house of your dreams.
Relocating is time consuming and stressful. We regularly work with clients who live abroad. We hunt, short-list, prepare your viewings, and make the search process as easy as possible. We oversee the negotiations, manage the conveyancing, and deal with the headaches, so you can concentrate on other aspects of your move.
A holiday home is often an interesting mix of investment and heartfelt connection. You want to use it, but you may well also be keen for others to use it too. We can advise you on what factors to consider in making your decision. And we can then find the perfect holiday home for you to enjoy.
Others say, ‘location, location, location’. We say, ‘location, purpose, price, capital growth, rental returns’… the list goes on. Knowing the market is critical. Local knowledge is key. We ensure all aspects of your investment decision are addressed. Finding, analysing, negotiating, and completing… it’s what we do.