Do sealed bids tend to go higher than the guide price?

[sethstarkaddersmum]

There was an absolutely stunning house on the market near us (though not quite near enough, we decided in the end) recently - stone-built, right next to a ruined abbey in an amazing setting.
We were puzzled by the lowish price which was a lot less than what is usually asked for round here for similar things that are not in such amazing locations.

However, the price advertised was a guide price and it was going to be sealed bids, and they had a specific day for viewings.

This made me realise I know nothing at all about how sealed bids tend to pan out.
My question is, do we assume that they will have expected a much higher price than the guide price? Is that how it tends to work?

(hopefully in a month or two we will be able to see what it went for but the info's not there yet.)

thanks.

this was it in case you're interested. Half a million seems v low despite it needing modernisation.)

I know that in formal house auctions run by auctioneers the 'guide prices' are traditionally always pitched well below the bids the seller is really expecting to get at the auction.

In the recent hisory of house prices sealed bid tenders have usually resulted in the final price being higher than the asking price especially in London but that was just the housing bubble not the fact that tenders result in higher prices as a norm.

In practice, guide price is therefore meaningless, all that matters is what people are willing to pay and in auction theory (yes there really is such a thing) informal tenders, formal auctions, or sealed bid tenders should result in a similar level of prices being bid by buyers. Whether the seller will accept that price level is another thing.

In other words, just bid what you think it is worth and you are willing/able to pay and dont worry about asking price.

thanks BeenBeta, that makes sense.
auction theory.... sounds interesting.... what kind of a theory is it? mathematical? economic? is it worth my mathematical dh going off and finding out about auction theory? or is it all sort of common sense?

I can imagine a rare and desirable house behaving like a bit a house in the housing bubble even if the overall level of prices is going down. does that make sense?

Its economics. The Wikipedia page is a nice entry level to it.

Its true that emotion may make some bidders 'overbid' BUT that can occur in any auction.

I have no idea, wouldn't all bidders be getting a full survey and valuation before bidding, putting a bid in under or at that valuation? Guide prices when houses are on the open market seem very rough so goodness knows what they mean at auction.

By the way, that is a beautiful part of the country. I grew up about 15 miles away near Borouhbridge.

I know it has been popular with people from London coming up and returing there so prices have raced up in recent years but the market is a lot less hot now and even quite nices houses can languish if over priced. My parents now live in a village near Scarborough and I know of several houses like that that have been on sale for 2 years or more.

Yes, it is wonderful isn't it? We went here and here yesterday. Much nicer than the flat Vale of York countryside.
It would be too far for dh to commute to Heslington though - despite his trying to convince himself he wouldn't mind an hour drive each way. So we are looking more seriously around Malton, which is a bit closer to the countryside we love but more realistic for dh's job.

Yes I fear that it would be a drag especially in winter. Anywhere south of York will be expensive so Malton is a good choice.

I like this and will be in your price range if you get a 10% reduction - not impossible in the current climate. It is a commuter village though.

that is a gorgeous house!

prices really are coming down. A year ago there just wasn't anything like that that was reasonably priced; now the stuff that was on the market for too much money is still there with only tiny reductions, but new things seem to be appearing at a far more sensible price. £550k sounds pretty reasonable for something like that.

we're not in any hurry to move and were planning on sitting tight until the perfect house came along; we might well view that one though, thanks!

Beautiful area. Word of warning though. I think this property may be within the boundary of a scheduled monument ie an archaeological site protected by law. Byland Abbey is certainly scheduled, and the EA blurb mentions the house is in the former abbey grounds, possibly on the site of the guest houses, so I'd be amazed if it isn't surrounded by scheduled land. If so, you would be very restricted in doing anything at all to the property that involves ground disturbance or which would affect the setting of the monumemt.

I have tried to check www.magic.gov.uk for you but the interactive map is unavailable. To check yourself you need to go to the map, Design your own topic (select Scheduled Monuments) and then navigate to the Coxwold area. When working the map should show the boundary of the scheduled monument.

NB even if not scheduled, sounds like there would be archaeological issues with any works at the property. Worth checking with the local planning authority for any planning application history. HTH.

Duh, I have just realised you chose not to buy it. I was puzzled as to why it was showing as Sold.

Anyhow, the info I gave below could have been why it seemed a low guide price. Worth watching out for with future properties.

I know GaelicSheep - one of my dreams is to have a natural swimming pool and though there was a stream by the side of the garden perfect for feeding it I can't imagine them letting anyone dig a massive hole in that garden

Seriously, do you think this sort of thing is likely to affect the price of a property in general? My impression with listing is that the kudos of having a listed house makes up for the inconvenience of not being allowed to do stuff; do you think archaeological scheduling might have more of an impact on price?

thanks for tip about scheduling map btw!

Sealed bids tend to be used for unusual properties. We sold my in laws house this summer by sealed bids and it achieved well in excess of the guide price. The estate agent was brilliant and we ended up with 18 bids, 2 below the guide price and all the others well above. The people who bought didn't have a survey done until after the bid had been accepted so you would need to have a big fudge factor for less obvious work if you did the same.

IME, schedulings can create real problems for property owners, but then it does entirely depend what you want to do. I have come across cases where to be financially viable a property really needs total renovation/redevelopment but English Heritage won't hear of it. However, that's generally when it's a ruin that is itself scheduled. In the case of this house - if indeed it's in the scheduled area - then the house itself would be excluded but the ground beneath would be scheduled. I should imagine though that if you were wondering why it seemed cheap (not sure half a million sounds cheap to me!) then any scheduling may have played a part.

There is information for owners of scheduled monuments on the EH website here

The agent often undervalues to attract interest.

It isn't listed and so basically they can't stop you doing what you want although changing exterior will be tricky if it's in the nat park. They will try and make the owner list it as a condition of planning but you can refuse. As long as you don't want to change exterior wouldn't need planning.

We viewed a house recently that was on at a guide price of £595k (and that would have been a stretch for us). It went to sealed bids and sold for £700k , so yes, even in the current market, guide prices can be significantly lower than the price they expect to get. Good luck with whatever you decide to do about the house!

thank you everyone. We are not interested in going for that particular house (which is sold anyway) but it made me realise how little we know about the sealed bid process and I want to get my head round it in case one we really really want comes up with sealed bids.

half a million sounding cheap - well it's all relative isn't it?! we have been keeping an eye out for a few years and until recently there was hardly anything between 500 and 700k; and the supposedly half million houses were very little better than our current house which was recently valued at a lot less than that!

I will be interested to see what this one went for, when the info comes out.

It's interesting about scheduling. From my archaeological days I remember farmers used to get very stressed if there was too much archaeology on their land in case it got scheduled; I'd never thought about it in relation to property before.

When we were looking at buying a listed house recently I came across the advice that you should never buy a listed house unless you are happy with it as it is because even if you take advice beforehand you can't ever guarantee any alterations will be allowed. Maybe one should see scheduling as similar in relation to the garden?

You are right about Listed property but I wouldnt worry too much about archeology on the land. As long as you dont intend excavating it then it should never concern you. My Dad had several burial mounds on his farm. He wasnt allowed to plough them or level them but it was not a major issue.

Sheep liked laying on them though.