Metro - 18 April 2013
Sealed bids – what not to do
By Jo Eccles
Sealed bids are still common practice in the London market, and it pays to know how to approach them.
A lot of buyers hate the idea of getting into a bidding war. Typically, this is where you have more than one buyer and the estate agent plays the buyers against each other, going from one to the other as they each increase their bids. This often causes a lot of bad will and is usually stressful for all parties.
The benefit of sealed bids is that it is a quick and clean way of concluding a situation where more than one buyer is bidding. Usually, the estate agent will notify all parties that the property is going to sealed bids, and they will set a deadline for bids to be put forward in writing.
If you’re facing this, I suggest you participate. One buyer I recently spoke to tried to avoid sealed bids by making an offer and saying it would expire 24 hours before the sealed bids – essentially the seller had to choose between him, or waiting for the other offers to come in via sealed bids. It’s quite an aggressive tactic and rarely works, as this particular buyer found out. My advice is to play by the rules if you’re participating – you don’t want the seller to think you’re an aggressive buyer who is going to be difficult throughout the purchase.
When deciding what to offer, think about what the property is worth to you, rather than trying to second guess your rival buyers. You have no way of knowing what they will offer, so focus on your own bid and selling yourself as a great buyer.
Remember it’s not always just about price, the seller will also take into account who you are, whether you can accommodate their preferred time scales or not and so on. Therefore make sure you sell yourself in your offer letter – who you are, your profession, why you’re buying, and your financial position. That way the seller can connect with you and you won’t leave any gaps in your offer.