Sealed bids - HELP!

[silviaeclair]

Looking for some advice from others who have experience of this. We're buying a house and we're in a bidding war with another family. It's already gone over asking. We're now in a situation where we have to put in final offers in sealed bids by Monday. I really don't know how to approach this. We can afford potentially to go up quite a bit more than we have, but I'm worried that we'll be paying way too much. And we might lose money when we eventually come to sell it. Plus the market looks like it could be dropping. It's a house that's been renovated and extended a lot to a really high standard, so it's pretty impossible to tell how much it should go for based on other houses in the area. Does anyone have any advice?

I’ve sold my last 2 properties through sealed bids. It isn’t always about the highest bidder winner, especially in this slow market. Vendors will usually also consider best offer in terms of price, as well as proposed likelihood of completion, smooth process etc. May be worth outlining in a letter your position and ability to commit to the purchase (e.g. proof of financing arrangements, proposed completion date, solicitor already lined up etc). Do you know if the vendor has somewhere to go? Do they need to still find a place themselves? Is the other buyer ready to move quickly? Etc etc. Depending on the overall situation, you can tailor your offer to highlight any favourable position you may have.

Do research around sold prices in the area. Zoopla is handy to see sale prices and past listings with photos of recent sales. Just be wary you’re not getting too emotionally attached and bidding more than the top end of the local market for comparable houses.

I’d also do some research by calling other agents in the area tomorrow morning and asking them about that particular road, catchment area etc. Ask them what the usual price ranges are and do certain alterations impact resale etc. At that stage you’re asking general buyer questions as a potential client though, rather than telling them you’re actually involved in a current purchase.

Good luck!!

Thank you. That's helpful. Frustratingly the vendor has said they're not interested in our position (we're renting and cash buyers, so had assumed they would want us above others, but no). The other buyers don't need to sell their house to buy this one, but they will need a mortgage. The vendor has found a house already. No chain.

Does anyone else have any experience of this? Or advice as to how much to go over asking? I feel so stressed about the whole thing in thinking of just pulling out.

How much is the house on for? What part of the country are you in?
It's really hard to advise as so many differing markets

Agree. Tricky to advise without specifics

I don’t have direct experience but I guess you just have to offer what you think the house is worth and the maximum you are comfortable with so that you don’t feel ripped off if you win and that you don’t feel disappointed if you lose it. Sorry not much help. Good luck. I have also heard it’s good to make it an odd number just in case the other couple offer the same so for example 325,228 or such like.

I'd write an outline of all your details:

Price offered (go for a non-round number in case of a tie)
Sale position and proof of funds e.g. bank statement
Details of solicitors you will be using (local not call centre)
Target moving date

We've "won" 2 houses via sealed bids.

In both cases, we wrote a letter outlining our position. Both times we were in rented, set out my H's firm would manage the sale (solicitor) so there would be no delays, had mortgage in place, would move to their timescales, wanted it as a family home.

In 1st case we weren't the highest bidder so circumstances did count. 2nd time I don't know whether we were highest bidder. In both cases we did some calculations about what we thought it was worth (comparables plus cost of alterations etc) and then added on whatever we were prepared to pay to get it. Off the top of my head, about £2k the first time and £3k the second time. The resulting bids were say XXX,623.

We went to best and final offers on a property late last year, just us and one other set of buyers, we'd both offered full asking price originally and were in similar circumstances. They won, and I happened to check on Zoopla last night, they paid just over 11k more than asking price. I suspect they've overpaid but who knows, I don't have a crystal ball to know what will happen in the future.

Bid what you're prepared to pay, just don't get caught up in the 'winning' to the point you overlook the value.

Thanks all. Really useful. It is very hard not to get caught up in the winning. House is in the south east. It's £535k. We've already gone to £540. Street ceiling price is £430. But this property has been extended and decorated to a high standard - sliding doors, expensive kitchen etc.

Our flat sale went to a "sealed bid" last autumn in E London. It was actually just a best offer by such and such a time to end the toing and froing between 2 interested parties , a "bidding war" if you like. Really it was just a device by the agent to push someone into a panic. Our buyers were far more sensible and both barely moved their price and we picked based on position. I would be wary of going that far above road ceiling price in the current climate in my area.

The agents would have already taken into account the works and standard of decor when pricing the house for sale. Even then IME they push for an optimistic asking price. You’ve already exceeded that and I wouldn’t go much higher for worries of being underwater then in a stagnant market.

Can you look at other similar pre-renovation houses for sale and do extension/redecoration work yourselves? Otherwise you’re paying an premium to the vendor and don’t have much upside if/when you come to sell

Yes, that's very true. It's worth a lot to us as its catchment for the school and it means we can move out of our hugely expensive and not very nice rental property. Plus we wouldn't have to do much work, which with two small children is ideal! But as much as I love it, I feel very differently about the house now that the process has become so stressful. I think we'll put in our current offer of £540 again. I feel comfortable with that. The thought of paying £545 or as much as £550 for it just feels wrong.

I think maybe go for something like £541,327, plus outline your strong position being chain-free and have lined up mortgage offer, solicitor retained etc. Good luck!!

"I think we'll put in our current offer of £540 again. I feel comfortable with that. . .The thought of paying £545 or as much as £550. . . We can afford potentially to go up quite a bit more than we have. . ."

Put it this way, how would you feel if the house has finally gone to the other buyer for £551k? That is to say £11k over what you said you're willing to pay. That means for you starting from scratch again and heaven knows how long before you finally find another similar or better house at the right price. Meanwhile, your kids are growing up in the same old house/flat that you're obviously not happy with.

Personally, I take a different approach - don't give a damn what the other properties are worth in the street; they are all different! I bought my house in north London at asking price, one of the first to view, on the condition that the agent and vendor withdraw all further advertisements and viewings. I didn't even bother with a full survey either. Other than a small already approved mortgage, am almost a cash buyer and ready to move in straight away. Vendor was also ready to move out straight away.

Forgot to say I was willing to pay up to £50k more when it all began because I really love the house and the location. Three years and eight months later, the property is valued £155k more according to Zoopla - in spite of Brexit! Frankly, I wouldn't sell if it's another £50k on top of that.

Moral of the story: Pay what you think the house is worth to you.

"I think we'll put in our current offer of £540 again. I feel comfortable with that. . .The thought of paying £545 or as much as £550. . . We can afford potentially to go up quite a bit more than we have. . ."

Put it this way, how would you feel if the house has finally gone to the other buyer for £551k? That is to say £11k over what you said you're willing to pay. That means for you starting from scratch again and heaven knows how long before you finally find another similar or better house at the right price. Meanwhile, your kids are growing up in the same old house/flat that you're obviously not happy with.

Personally, I take a different approach - don't give a damn what the other properties are worth in the street; they are all different! I bought my house in north London at asking price, one of the first to view, on the condition that the agent and vendor withdraw all further advertisements and viewings. I didn't even bother with a full survey either. Other than a small already approved mortgage, am almost a cash buyer and ready to move in straight away. Vendor was also ready to move out straight away.

Forgot to say I was willing to pay up to £50k more when it all began because I really love the house and the location. Three years and eight months later, the property is valued £155k more according to Zoopla - in spite of Brexit! Frankly, I wouldn't sell if it's another £50k on top of that.

Moral of the story: Pay what you think the house is worth to you.

I really agree with the last poster 100%, it's what it's worth to you! And if you're going to live there for the next 5/10/15 years it really doesn't matter as the housing market is always changing.
I would have gone just above your last offer as I'm pretty sure that offering the same as your previous offer in a sealed bids scenario is going to result in the other person increasing their offer.
Also agree with writing a lovely note outlining your situation and how much you love the house and want it for a family home.
Don't under estimate how much sway that can have in the estate agent and the vendor!
Update us when you know and good luck

I think that a £5k increase in your offer is not very much at all in comparison to the purchase price. This is about common sense - surely £10-20k on a £500k mortgage makes very little difference to repayments and affordability?

I increased my offer for my very first house by £5k and that was only worth £120k!!

How much is your monthly rent? If you were to take 6 months to find another place.. how much would you spend?

Thanks everyone for the messages and advice.

We had a sleepless night last night working out what to do and finally decided to just go for it as we love it so much. We offered £551 this morning. That's £16k over asking.

But it's bad news. The other side offered a bit less apparently, but they liked them more.

The estate agent says he doesn't understand the vendors at all as we are much better buyers - we're renting and we won't need a mortgage having just sold our house. Whereas the other side will need a big mortgage.

I'm a bit devastated by this. It's one thing to lose out due to money, but quite another because they don't like us. And they've met our children when we looked round too. (They were having a mad half hour and being a bit loud, so perhaps that's what put them off).

Anyway, in desperation I've asked the estate agent to offer £555. He said he'll pass it on.

I wonder if it's because we've moved to the area from London and these other people are local?? I just don't know.

I'd be thinking 'stuff 'em' at this stage. If the other offer is overvaluing the place then the other party may not be able to get the mortgage they need and unable to make up any shortfall. They may come back to you at that point. I'd then go back to your £540k offer unless they complete within X weeks for which you'll pay more.

Sorry to hear that OP. I know how it feels to get attached to a property and then lose it (we were gazumped back before the credit crunch happened). With hindsight, I’m actually glad, as somewhere better came up a year later

Actually just remember it was gazundered, not gazumped! Vendor secretly continued to show the property and then tried to get us to increase the offer after we’d paid survey etc

I suspect the vendor may have to come back to you if the other party's building society feel that the house has been overvalued - they won't get the money they need to buy it then. You can they go back with a lower offer than the one you've put in today.

Boo!!! I am sorry....