Is a bidding war a real thing?

[midcareercrisis]

My one bed flat in north London has been on the market for 2 weeks at OIEO 400k. I paid 410k for it 5 years ago, so 400 would have already been a loss, hence the OIEO.

I’ve had 3 offers come in. First at 385, second at 390 and third at 392. The estate agent is pushing me hard to accept one of these offers but I assumed in this situation it creates a bidding war situation, where he can now really go in with the competition and try to get them to outbid each other.

Have I watched too much of The Apprentice? Is this not really how it works? The agent seems super reluctant to push the buyers at all, saying there’s a risk of them all backing out.

What should I be expecting from him at this point? Should I be insisting he ask the buyers for best and final offers or should I accept that this is as good as it's going to get?

Unfortunately 5 years ago was the top of the market, and this is now the bottom- you have my sympathies as I'm in the process of selling a flat in London purchased around the same time, and have had to take a hit.

How does the price compare to similar sold properties in the area (that have sold now)?

However the EA works for you- if you want them to push for higher offers you can ask them to do that.

It sounds like he’s already pushed the buyer who came in with £392k. If you think the buyer offering £390k is generally in a stronger position you could legit say you’re conflicted and push for best and final, but you’re talking about squeezing what, £1k out of someone with the risk they walk away. It’s not a seller’s market.

Well, surely if you want them to bid higher you need to start by rejecting all of these offers. That's your gamble to take.

It's a buyers market

You can decline the offers and see what happens though

£400k for one bed

The property market is bonkers

I agree it depends what they've said already.

We got very annoyed when we put in an offer, were asked to up it by the estate agent who told us the figure he thought they would accept, then were contacted again about it we could possibly add even a token amount of 2k, and then the seller took a week to decide that it still wasn't enough. We took our offer off the table rather than attempting to continue negotiations and were quietly pleased that we saw it still on the market months later.

Estate agents normally talk of bidding wars when they are trying to secure instructions. Whether it will actually go to a bidding war is another issue.

I am sure some houses have gone to bidding wars somewhere in the UK. How common they are probably no one really knows.

I think the fact you got 3 offers in 2 weeks shows you that there is some interest out there in the property especially in the current climate.

Whether you want to risk pushing or waiting for more is a question only you can really answer. Your top offer is what, 2% under the suggested price. Doesn't seem too far off to me. My guess is that if you wanted more you should have listed higher in the first place.

Thanks to everyone for their advice.

I totally agree on the final point on the post I've quoted here. I made the age old mistake of trusting the EA when he said that OIEO will bring in buyers at both the higher and lower price points. Guess I'll call him and see what he says...

I had a similar situation recently - three offers came in over the same weekend. In this situation I would be expecting the agent to go back to all three and tell them to submit their best and final offers by X date, along with their circumstances/financial situation.

Bidding wars are hideous and unethical (and only really work in an overheated market) but you should get your EA to put some work in now.. this is good news for you! Unless anyone has stipulated it’s their highest offer in their initial submission, they won’t be expecting their first offer to be accepted.

Are you also looking at the circumstances of the buyers? If anyone is genuinely chain free then I'd look at them more favourably than anyone with a chain behind them.

This is exactly what’s happened to us. We’ve now decided to just stay where we are. Four properties and the estate agents pulled the same trick on all of them. All still on the market.

Oh I don't think you should accept such a large loss after just 2 weeks. I would ask the people who said £392 to offer the asking of £400k. It was wrong of the agent to let anyone think they're in with a chance at £385!! Are you in a rush to move? Have you looked at what other similar flats sold on Zoopla - that's a better idea of pricing than what the agent is telling you.

Agents just want to move a property as quickly as possible to get their commission - so don't always act in the seller's best interests. A flat in a nice part of North London shouldn't sell at such a loss really unless it's in significantly worse condition than when you bought it.

I had to tell our agent to push for best and final offers when we sold our last house. I don’t know why English EAs are so reluctant to push. Our house had a very healthy level of interest immediately. When, at the same period, we were buying a house in another country, we were literally on the phone with the EA bidding against another buyer over the course of a few hours. (We won, but ended up pulling out before exchange on discovering something that made the house unsellable — the vendors took it off the market, rented it out, and it’s never sold since.)

To be honest those offers are close together enough to come down to who is the most proceedable imo. It's tough to get a sale across the line these days, don't get too hung up on the price, take the offer of whoever will complete fastest before prices drop further.

Complete speculation, you can’t assume that just because the seller is asking for £400k it should get that since it has 3 offers within couple of weeks. It may well be that 400 is too high regardless of what OP bought it at X years ago. Reality is flat market is under pressure from BTL pull out and the constant story of increasing service charges at
the will of agents/landlord. Let alone cladding. Houses in the last 5 years have picked up and you d be hard pressed to find anything in North London at 2019 price.

@midcareercrisis Bidding war is very much a real thing but tends to happen only on really popular properties either due to its location, condition and if priced realistically to instigate a lot of interest.

I’ve been in 4 bidding wars this year in total now and still in shock at how outbid I was cause I’ve gone up to 15k above asking.
However I am not in London though.

@GasPanic if OP had listed for more there is a high probability that they might not even have had the viewings they’ve had or any offer on the table. No-one can know for sure.

The market is completely different to what it was a few years ago and this is a flat. There is only so much people will bid on flats due to SC and other risks.

Maybe the EA is encouraging you to accept an offer because that’s what they are seeing similar flats sell for?

If you’re really keen to sell, go to best and final otherwise I guess hang on and see if anything better comes along but there’s no guarantee anything better might come along.

Also let your EA know not to bring in any offers less than what you want for it

I think you need to speak to your agent and ask about the local market. Is there a reason he thinks the potential buyers would pull out? Has this happened more recently in his area? Did they all state that this was their best and final offer already? You also need to carefully check each potential buyer's position, particularly if they need to sell somewhere or not and what their source of funding is. I would also do some research into what prices flats are actually selling for currently (RM/ Zoopla are obviously many months behind).
Once you have done this research, you can decide whether or not to take a chance with best and final bids.
I disagree with the poster who suggested that should have listed higher for higher offers. If the flat was genuinely lower than market price, I would expect some higher offers, although perhaps that might still happen.

The bottom? No chance, the bottom is a long way off, it will be much lower prices than today. I agree thought that the ship has sailed. the agent is right, "bidding wars" are something from history now.

Go for 385, and use PropertyLog IMO.

London property market is very much about holding your nerve when it comes to 1 beds. If OP's flat had cladding issues it would have dropped considerably more than just 20-30k so I assume this isn't an issue. Depends how quickly OP needs this sale of course.

Anyone viewing a property with OIEO can likely offer at least the asking or wouldn't bother viewing as there's plenty of cheaper flats. Once you're upwards of £375k, it's a buyer who clearly wants and is willing to pay for location (or something like period features etc) as that is already excessive for a 1bed. And there aren't many 1 beds available in desirable locations that aren't either rentals (nightmare to get vacant possession sometimes or risk of them thrashing it before leaving), or new builds or ex council. Rentals and ex council are the toughest to shift - new builds, house conversions, period properties depend on service charge/ground rent. I don't think OP's 1 bed could be ex council as they don't hit the £400k threshold generally.

All OP needs to do is look at what else is on the market to figure out whether there is tough competition, look through the eyes of the buyer, then make a call.

I don’t know why English EAs are so reluctant to push.

They're only interested in a quick sale. They couldn't care less that you could get 10/20k more and the couple of hundred extra commission it will mean for them.

The first offers are pretty much always the best offers you'll get. Serious buyers are actively looking, and if they haven't seen you in two weeks, aren't that serious. The chances of a new more interested buyer joining in the next few weeks is low.

You have three offers on the table. To show you're serious as a seller and not going to play them around, which is important for both sides, get the agent to explain there are three offers on the table and say you'd like their best and final offers by a date early next week. Then pick the best buyer based on price and position. I'd take the lower price if it was cash any day, or a low LTV especially if comparable evidence in the area suggests a lower valuation.

I‘m surprised the EA isn’t suggesting they go to best & final offers. Three offers shows a lot of interest in your flat. I would stick to your guns & tell the EA that’s what you want as the next step.