Using the method of sealed bidding is a way for sellers to extract time wasters, or for where high levels of interest are anticipated. This focusses the sale on those buyers who are committed, or who have no chain and are able to exchange quickly and at the best price.
The fact that all bids are kept confidential in this process also means that properties can sell for far more than the seller anticipated. Although the secretive nature of the whole process can mean it is a nerve-wracking experience, there are lots of ways to ensure you are the bidder who snares the house in question.
How does it all work?
For the majority of cases, the whole process is actually quite simple. Buyers view the property, sometimes on their own, other times as a group, or on an open day organised by the estate agents.
Following the viewing, buyers will be invited to submit their ‘best and final’ offer in writing by a certain date. Sometimes if the number of interested parties has exceeded what was initially expected, then they may not be told to submit until they call to make an offer.
All offers will then be considered by the vendor and estate agent before the chosen one is revealed.
What to Include in the Bid
Here are a few key essentials to include in the envelope that you will hand over to the estate agent when you come to submitting your bid:
- A letter with your name, contact details and the exact figure you are willing to offer for the property.
- Details of how you intend to purchase the property. If you will be taking out a mortgage, provide a copy of the offer in principle.
- If you have a property to sell, provide the state of the sale, along with the contact details of the agent you are using for the sale. If you are a cash buyer, proof of the cleared funds will boost your attractiveness further, and if you are in a rented property it is worth including details of the period of notice you are required to give.
- Sometimes it helps to include a personal letter written directly to the seller. Include details about the future use of the house, such as to bring up a family and to continue to preserve its character, etc. Estate agents report that they have seen sellers accept lower bids because of a particularly nice letter, or a photo of a family that has captured their heart.
Seven Secrets of Success:
1. The Highest Bidder Does Not Always Win
The seller will be keen to know what position the bidder is in, and how this relates to how quickly they need to move. Factors they will consider include, the bidders financial position, reliability, and if emotional ties to the property exist they want to know what kind of person will be living in their old home.
2. Sell Your Property First
The seller wants to know that the bidder is capable of completing on the property without hold ups or problems. Being part of a chain can be viewed as problematic. If you are renting, or not depending on the sale of a property, you will rise to the top of the pile.
3. Sell Yourself as an Attractive Buyer
As well as showing your reliability you also want to sell your other assets including a reliable solicitor, a mortgage in principle letter/proof of funds, and a surveyor at the ready.
4. Make an Unusual Bid
Steer away from making the exact same bid as someone else by bidding with an unusual figure. For example £250,102 as opposed to £250,000. It will make you stand out and help avoid a tie.
5. Know the Seller
Get a sense of who the seller is, what they want from the sale, and whether they are in their own purchase. Also scope out your competition: estate agents can’t discuss the other bids or bidders, but can tell you how many you are up against.
6. Be on Time
Do not miss the deadline for bids. The National Association of Estate Agents (NAEA) advises that you submit your bid just before deadline and deliver in person to ensure it has been safely received. Do not worry about looking desperate — think of it more as looking keen.
7. No is Not Always No
If you get the dreaded call that you were not the successful bidder, remember there may still be a glimmer of hope. Remember that things can fall through and you might be second on the list.
How We Won
Associate Editor and author of this article, Natasha Brinsmead, shares her own experience of the sealed bids process.
When my husband, Bill, and I came across our run-down Edwardian cottage, we were excited at the potential it offered our family. The seller was a lady who had lived in the house for the last 40 years. Sadly, we were not alone, and the day of viewing saw us wandering around the property along with a group of other hopefuls.
However, there was no mention of sealed bids at that point. Later that day, we rang the estate agent to make an offer and were told that there was not much point as they expected the house to go to sealed bids. We rang a few days later and were given a deadline for best and final offers and were told what we would need to do.
In the lead up to the deadline we got an agreement in principle from our mortgage lenders, contacted a solicitor and wrote and rewrote drafts of letters to the owner as to why she should choose us, including details of why we loved her house so much. Despite offering the full asking price and being renters, a few days later the agent called to say we hadn’t got the house — cue tears.
A week passed and I found the agent had left a message on my phone. I called them back to be told that the chosen buyer had pulled out and that we were next on the list — the house was ours.
Once we moved into the house, the neighbour – a very close friend of the seller – informed us that not only was our bid lower than that given by the buyer originally selected, but that we had not been second on the list at all — but third. Another buyer was second choice and had also made a higher offer. They too had later pulled out, leaving the seller with us. Funny how things work out.