But this can prove daunting for buyers, especially first time buyers who are likely to be unfamiliar with the practice whereby sellers ask for bids to be submitted in sealed envelopes.
Now for the first time ever the National Association of Estate Agents (NAEA) has issued guidance on how it works to avoid confusion among buyers and sellers. It points out that the highest bid may not necessarily be chosen as other factors can be taken into account such as moving date.
Sealed bidding is a method often used by people wishing to sell a property where high levels of interest are either anticipated or already being achieved in order to sift out the time wasters and find buyers that are committed and willing to exchange quickly at the best price.
‘The confidential nature of the process can mean that homes can go for more than the seller anticipated. However, for first time buyers or those that are unfamiliar with the sealed bids process, the whole situation may be daunting because of its semi secretive nature,’ said Jan Hÿtch, president of the NAEA.
‘There are a few inside tips though that can we can suggest to support those considering buying by this process. Buyers often think that if the property goes to sealed bids the highest bidder will win, but inviting bids doesn’t mean the highest offer always secures the property,’ she explained.
‘The process involves assessing all the information available to find the buyer that has demonstrated the strongest and most reassuring ability to proceed and complete a sale without any trouble. In order to have the best chance of succeeding in this situation, buyers will need to be well prepared in advance with their finances and paperwork all in order,’ she added.
The advice from the NAEA includes being open about your situation and ability to purchase. Buyers should present their offer in a way that demonstrates a commitment and ability to exchange quickly.
The bid should include a list of things that you already have in place such as a reputable solicitor or conveyancer, a mortgage in principle letter from your lender, and a surveyor on standby, all of which will demonstrate how serious you are in securing the property. This can make your bid more attractive, even if it isn’t the highest, the guidelines say.
It also suggests that to avoid ending up making the same bid as someone else, try using unusual numbers like £200,103 instead of £200,000. This can sometimes make the difference between a successful bid and a tied situation which will delay the sales process further.
It makes sense to get as much information as possible from the agent in order to assess how likely it is that your bid will be successful. Agents may not be able to discuss the other bids but they can give an indication of how many bidders there are and even the strength of other bidders. If you don’t ask you don’t get, so don’t be frightened to ask.
Buyers are also advised only to bid the amount they can afford and are comfortable paying for the property, rather than the price they think you will be needed to secure the property. Offering a price you cannot afford will only result in a sale that is unlikely to go through, or one that you might regret.
Timing can be important. Buyers don’t want to miss the bid deadline, but equally it is important not to submit a bid too early. Best advice is to submit your offer just before the deadline and deliver the offer in person. If this isn’t possible, always confirm with the agent that the offer has been received.
If the property has gone the way of sealed bid, it has probably received a lot of attention from buyers. This also means that the seller will have a lot of offers to review and consider. This may take a few days.
