‘It’s easy to fall in love with a property and find yourself getting into a bidding situation with another purchaser, but in the current climate, I would advise against it,’ said James Greenwood of Stacks Property Search & Acquisition.
‘Stresses are going to kick in soon, interest rates are likely to rise and economic cuts will get deeper. Paying a dividend for a property this spring and overstretching your finances could be a huge mistake,’ he explained.
‘There’s also a strong likelihood that more property will start to come onto the market as soon as April is over and supply will ease. Be prepared to walk away from a property if you think the bidding’s getting out of hand,’ he added.
He believes that if a buyer knows that there is a great deal of interest in a property and it’s likely to go to best bids, it is advisable not to get drawn into making an offer before the process starts.
‘This will simply help push the price up and the bidding will start at an inflated price. Tell the agent from the outset that you’re interested but that you’re not prepared to get drawn into a competition. Then drag your heels and stall,’ he said.
‘Do make it clear that you’re a good purchaser though, whether that’s because you have cash, finances lined up, or anything that makes you attractive. Keep looking at other houses, and tell the agent that’s what you’re doing. The other interested parties may not be as attractive as the agent has implied or as attractive as you, and you may find that you are pursued by them and the boot becomes firmly on the other foot,’ he added.
He also advises not to an estate agent the details on what you can afford. ‘Tell them what price range you’re looking in, but not a detailed breakdown of your finances. The more informed they are about your finances, the more they know how far they can push you. Be vague. Estate agents always assume you can afford more than you say,’ explained Greenwood.
‘If the property winds up going to best bids, and you decide you are going to enter into the fight, then you need to be well prepared. In my opinion, best bids or sealed bids is a terrible method of finding the right price for a property, but it’s the one favoured by estate agents when there are a number of buyers bidding on a property,’ he added.
Anyone contemplating sealed bids should be cautious, in his view. ‘Establish your bid on the basis of what you can afford and what you think the property is worth; not on the basis of what you think you will need to bid to beat everyone else,’ he said.
‘Submit an uneven figure, for instance if £700,000 is the limit to which you can go, submit a sum such as £701,502 in order to avoid a tie. I would also recommend stating as few conditions as possible,’ he added.
