Sealed Bids – A Buyers Guide
Sealed bids are a device used when demand significantly exceeds supply, especially for special property. Agents dont only use sealed bids for the top dollar property; its a method of sale used across all price brackets and they inevitably produce a feeling of despair in a buyers heart.
Gemma Miller of George F White says, “For clients who have a high level of interest in their property, sealed bids are a simple way of allowing the property to reach its true value”. Prospective purchasers are invited to submit their best and final offer in writing by a set deadline. Sealed bids have been utilised by us for many years but we understand for buyers it is often difficult to see any benefits.
Its a daunting situation for a buyer, and it can be difficult to know how to progress. The first thing buyers should understand is that the highest bidder wont necessarily secure the property; the client 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. Keep in mind too that the agent/vendor are free to do anything at a later date – its not a legally binding decision, so if someone else comes in with a higher or better offer, it may all change.
Sealed bids can be a good thing for a buyer – it allows you to see the property at something approaching leisure, then you can work out how much youre prepared to pay and what your bid should be.
How can you best approach a sealed bid situation? George F Whites advice is:
Read the rules issued by the estate agent carefully, and adhere to them.
Try and get the vendor to accept an offer before it goes to sealed bids.
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.
The bid itself is important, but equally important is the presentation of your offer, demonstrating your commitment, proceedability, ability to exchange quickly, flexibility of terms. Your bid wont only be judged on the amount; it will also be judged on how easy youre 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.
Get a survey and or any other investigations completed before the date for sealed bids, so your offer doesnt have to be subject to survey. Again, this will make your bid very attractive.
Attach a list of advisors (legal, financial,etc) which will further reassure the vendor.
Dont be frightened to ask the agent for information. It helps to know how many other bidders there are, where they come from, what else theyve been looking at. Agents cannot discuss bids or the individual details or circumstances of other bidders; but they can reveal how many bidders there are, and perhaps give indications of strength of other bidders, such information may help you assess how the bids are likely to turn out.
Dont miss the deadline, but equally, dont get it in too early. Look to deliver your offer in person to the agents office just before the deadline, if you cant hand it over in person then ensure you confirm with the agent that it has been received.
You will be at an advantage if youre using a buying agent. Buyers who use an agent to represent them will already have parted with a retainer, so vendors and estate agents know they are definitely serious. They also realise that the deal is more likely to reach completion, because the search agent will be overseeing everything for his client.
Dont expect an immediate result – whilst the agent will report all bids along with recommendations to the client the latter may require some thinking time so you may well not hear the outcome for three or four days, so spare yourself the pacing and stressing.