Help/advice on sealed bids(18 Posts)
DP and I are looking to buy a property in London and despairing at the prospect of having to put in a sealed bid. Gone are the days of negotiating the price - around here you are given one shot at a bid (often sealed, at the end of the open day viewing).
Just found out that a friend's property sold at £25 000 over the 'guided price' in a sealed bid this month. Property is in the area where we are hoping to buy.
So, few questions from those of you in the know:
1. How do we go about winning a sealed bid? (I understand that it doesn't always go to the highest bidder!).
2. How do we decide our maximum bid? Is it based on the maximum what we can afford, or the kind of sum that other recent sales went for? (can check most of those out on property sites).
3. Is there any way at all to still negotiate the price?
I wish I had x-ray vision....
We bought our paddocks this way. It is truly stressful. We decided to obtain advice on value, and therefore, bid. The land joined our garden but was not a parcel of land seen on the market regularly so we had no idea what to bid. You have the advantage of being able to check sold prices for similar properties. You need to take a vew as to how much you can afford and how good this house is, in comparison to the others. Is it worth a £25k price hike above sold prices? Location, high spec, garden etc.
We put in the figure suggested by our advisor. We were contacted, as were 2 others, for our final bid. That's code for they want a bit more money. We upped the bid by 10% and got it. Whatever you do, try and pay a fair price. They may well prefer someone who has sold and has a mortgage agreed in principle or a cash buyer against the actual highest bid. You will never know though.
Be aware that even when a property "goes to sealed bids" it doesn't always because people pulled out. Years ago we had an estate agent press really hard for sealed bids. Both us and the other interested party decided not to make a bid.
Look on the land registry website or Zoopla for recent sold prices in the local area.
When making your bid you need to outline the following...
Your financial position: how much your offer is, evidence of agreement in principle from mortgage company, bank statement with deposit.
Your flexibility: are you in a chain? How much notice do you have to give on current property? Remember that the vendor may not have found somewhere or may be in a hurry to complete. Ask the estate agent and tailor your information accordingly.
The fluffy stuff: give a bit of info about you and why you "deserve" the property. Are you a family looking to create a home and this place is just what you are looking for because of XYZ? Are you first time buyers just getting a foot on the ladder and this is your dream home because of ABC?
Finally, add a sentence about it being your best offer and a fair one and so you would like to leave it on the table if your offer is initially unsuccessful.
I agree with previous poster � have done this twice now. First time, was a complete do-er upper. Knew there was lots of competition. Put in our sealed bid at about �20k more than the guide price if I remember correctly, evidence of mortgage, set out that we were in rented property and could move as quickly as they wanted us to, my H was a solicitor and his firm would do the conveyancing & ensure there were no delays. Said we wanted it as our forever family house. Our bid was accepted. 3 weeks down the line, after we'd had numerous surveys / quotes done etc showing the true extent of the work required, we pulled out. House eventually went to a property company (at �10k more than we'd bid) so I don't think our bid was the highest � just that we were in a very good position.
A year later, similar thing � not quite as much of a doer-upper but a probate sale again. Sent similar letter but our bid was slightly under the asking price on that one (asking price was higher and at the very top of our budget). Again, got the property and completed on this one.
I'd bid the figure that you're happy with � that you won't kick yourself in 6 months wishing you'd offered �5k more, or kick yourself before you think you paid over the odds. Its really hard to judge. Good luck.
In London, to be successful at sealed bids on a good property you should be offering between 5-10% on top of the asking price.
That said, I've just accepted an offer on my london flat where the winning bid was 14% over the asking price. In central london areas this is not uncommon.
London is a unique and scary market right now. My advice if you love the property is offer the most you can afford. Good luck!
We lost sealed bids before and I was even really mad at my DH for not offering 25K more, as he bid only £5K more over asking price because the 'asking price was unprecedented'.
The house we bought went to sealed bids but we offered 15K under asking price. (DH's idea - my idea was even lower!) And we got the house. There were 3 other offers. The house was in good condition (great survey) but needed serious revamp in terms of decor. I'm glad the decor put off some competitors who were after grey F&B or something!. It's no different house than other houses in incredibly popular streets of SE London.
Just saying, it can be really black magic art - but even in London there is such thing as asking price being too much, if you know the area very well and did homework. Not all competitors are over-paying idiots, even if it takes only one nutter to sell. 5%-10% over asking price is the norm though if property is attractive and if the asking price is not absolutely too outrageous to start with.
Can I just ask why do sellers ask for sealed bids?
My friend lost out on a sealed bid property, she didn't really have a clue how to go about it
Some good advice here from other posters so I won't chop in on that, but did have one thing to add. London is moving so quickly (certain areas anyway) that getting sold prices from zoopla etc might be misleading. Even if just a few months old, they may be lower than you need to bid. For example, 2 bed maisonettes in our area of North London have gone up around 50k in four months, so the recently sold places on zoopla are way out. Good luck I hope you get it!
Roadwalker - so that everyone panics and bids more than they would in a normal offer situation. So they get more commission in the end. It's such a stressful and unfair way to do things, sorry to hear about your friend
Well I am not surprised she failed after reading the advice on here
None of us had a clue
The property we've just bought was about to go to sealed bids but the estate agents persuaded the seller to take it off the market at X price for is. I think because they liked the fact we're a young working family, that we've sold to a cash buyer & have a mortgage in principle. The house was advertised at an obviously too low price to try & get people through the door then turn to sealed bids - clever tactic really. But it turned into a bunfight - they had 20 viewing requests within the first morning & they just wanted it all done with. I think sealed bids are sometimes used when their would otherwise be no way to differentiate tens of identical asking price offers
My current house went to sealed bids. I pipped others to the post by making my offer in person on the first morning after the weekend open house.
Thank you so much for excellent advice everyone. We are doing all we can to get ready in case we want to bid after our viewing on Saturday. We are not part of a chain and are trying to get a mortgage in principle.
I guess my biggest worry is that our best bid won't be enough and that through this way of bidding we will be priced out pretty quickly. At the same time I don't want us to get caught up in it and offer way too much. I just hate the unknown aspect of sealed bids. Thank you for your words of wisdom everyone, it has given me a lot to think about.
Lots of good advice above. Have all finances in place eg agreement in principle / proof of deposit ready to show agents etc.
We have unfortunately been in sealed bid scenario numerous times over the last year and despite finances in place, good deposit & being in rental property had been unsuccessful every time until recently. It's very stressful.
The other tip I would add is to go for an uneven number. Eg property on market for 499 , we decided lots of people may offer 520 so go in at 521 700 etc. The bid we made using this tactic was successful.
Excellent advice by K8Middleton. Definitely find out all you can about the vendor from the estate agent. Stating that your tenancy finishes in June so you would guarentee to complete within 3 months might be attractive for a probate sale, but could knock you out of the running if the vendor hasn't started looking for a house yet/is in a chain.
I live in Edinburgh where it is the norm for property to go to sealed bids and i have bought 2 flats through sealed bids and I have hated it! Edinburgh is probably a different market than London but we had to bid £17k higher than the valuation to get our current flat last september, we weren't the highest bidder but the vendors picked us as we had a long entry date.
My tip would be to chat up the vendor as much as possible, find out when they want to move, have they found somewhere to go, have they lived there for years and like the idea of a young family moving in ie what's going to push their buttons if they have close bids. Also agree re outlining your financial position - mortgage in place, large deposit whatever to show you are serious and safe buyers.
We had real heartache buying our previous flat where we had to go through 5 sealed bid processes and quite often lost out by £5k. Obviously you don't want to over pay for things but in the context of getting the right place to live, particularly in a rising market and if it means you get the right place the £5k doesn't matter.
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