Property Advice

Monday 29 January 2018

Sealed bids battle in Hampstead- Useful or Outdated?

So here’s the scenario, there is a popular property on a sought after road and there has been lots of interest generated and as a result an open house has been arranged. There have been lots of offers coming in and the owner is advised to use the process of a sealed bid, however, offers related to a property do not generally come with a loving kiss!
Sealed bids are a useful tool to be used at times when demand significantly exceeds supply, especially when it is that ‘special’ property.

Agents don’t only use sealed bids for high value properties, it’s a method of sale used in all price brackets.  However, in my view it’s an outdated system one where it should be more formalised, restructured and transparent.  If you have been fortunate or unfortunate enough to be in the sealed bids group its a little “cloak and dagger” and your fate is decided by strangers.  Nevertheless, buyers should have to prove in advance of making their bid  (primarily sellers are most concerned with this aspect of the transaction), how ‘proceedable’ are the buyers, for example, is the sale going through to completion.  


So here’s the scenario, there is a popular property on a sought after road and there has been lots of interest generated and as a result an open house has been arranged. There have been lots of offers coming in and the owner is advised to use the process of a sealed bid, however, offers related to a property do not generally come with a loving kiss!
Sealed bids are a useful tool to be used at times when demand significantly exceeds supply, especially when it is that ‘special’ property.
Agents don’t only use sealed bids for high value properties, it’s a method of sale used in all price brackets.  However, in my view it’s an outdated system one where it should be more formalised, restructured and transparent.  If you have been fortunate or unfortunate enough to be in the sealed bids group its a little “cloak and dagger” and your fate is decided by strangers.  Nevertheless, buyers should have to prove in advance of making their bid  (primarily sellers are most concerned with this aspect of the transaction), how ‘proceedable’ are the buyers, for example, is the sale going through to completion. 

Preparing for the ‘sealed bid’ process
From the conception of looking at properties and going to view that special one we dreamed about, can feel like an emotional rollercoaster, perhaps we envisage sitting at the kitchen table reaping the benefits of all our hard work but the reality is quite a long way from that picture.    To get the ball rolling it’s probably best to get the vendor to accept an offer before it goes down the sealed bids process.  That’s why it is essential to have all the relevant information ready. 

However here are some thoughts about how to navigate through the sealed bids process.
·        In my own experience we, (my wife and I) acted quickly and found out from the agent as much as we could about the seller.  We met with the vendor as we did not want to become a number on the piece of paper.  One of the vendors criteria for selling the property was for a family to move in.  This is where he raised his family and this was an important factor for him to pass on a family home in a family orientated area.  Subsequently, the crux of the story was we were prepared to wait (quite a long time) this was crucial in the process of buying the property.  All these factors have to be kept in mind so preliminary investigations are crucial.  

·        Submitting the highest bid won’t necessarily secure the property for the eager purchaser. The prospective buyer is asked to submit their ‘best and final’ bid in writing, all offers are considered by the vendor and agent, with all the information gathered, a decision is then made.But, at this stage because it is not a legally binding decision on either parties, seller or buyer if someone else comes along with a bigger wallet then it’s all change.  If you require a mortgage, provide a copy of your ‘agreement in principle’  - if you have a property to sell provide the status of the sale or if you are buying the property in cash, then proof of the funds will greatly help.


·        Offering an unusual number means that no one else will be offering the same amount and it shows that you have given this matter much thought.  Try not to get caught up in the romance of it all and offering above what you can afford is not viable, offering the highest you feel most comfortable with is the most feasible, after all the highest bid doesn’t necessarily secure the deal.
Fundamentally, we know that buying a home is the biggest financial purchase of our lives and we have to get it right.  It’s human nature to be emotionally involved and hopefully reading some of the tips above will help prepare you if you find yourself in such a situation.

Guidelines for vendors:
·        How soon can they move?  Do the buyers timings fit with yours and are they prepared to wait if there is a delay in selling for whatever reason.
·        Consider all the offers on the table.  While the aim is to achieve the best possible price think about is this the best buyer for your position.
·        What deposit are your buyers offering?  If they have a large deposit then securing a mortgage will be easier.
·          Are they chain free?  how flexible are they?
·        Have they appointed a solicitor?


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If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 8366 9777. 

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