A sure sign that the market has doubled back on its downward trend is when offering the asking price is no longer enough to secure the house of your dreams. With a shortage of the best-quality properties in some areas due to people’s reluctance to sell, buyers are finding themselves competing in nerve-wracking sealed-bid auctions. And sealed bids are occurring at every level in the market, not just at the top. Although they’re more commonplace with homes in prime central London, country houses those in popular villages, requiring modernisation or those that are highly unusual are increasingly going to sealed bids, too.
A sealed-bid auction when several purchasers chasing the same house submit a written bid to the vendor’s agent by a certain date and time is regarded as a sensible way to give potential buyers a fair chance and sellers the best price. Once the deadline has passed, the agent sometimes in the presence of the vendor and his solicitor opens the envelopes and informs the vendor of the bids.
Unlike a real auction, the seller is under no obligation to accept the highest, or even any, bid. And, although the successful bidder is informed of his victory, losers aren’t told by how much they missed out, which could be many thousands of pounds or a tiny margin.
A sealed-bid auction can offer a seller comfort, knowing he probably couldn’t have achieved a higher price. However, a defeated buyer could be disappointed if he discovers he would’ve won if he’d bid just a few pounds extra.
Solicitor Saskia Arthur, from Boodle Hatfield, recommends finding out precisely what is required in the bid. ‘Be open and honest and give as much detail as you can. It’s crucial at the moment to sort out your finances and outline where the money is coming from.’ It’s not just a question of who’ll pay the most, but the quality of the buyer his ability to proceed with the transaction and how quickly he can complete that can seal the deal.
Bidders should only bid what they can comfortably afford, and agents suggest bidding an odd number (say, £651,000 instead of £650,000). As most offers are placed in tidy amounts, your odd figure could win you the bid.
All bids should include the following:
* Amount of your offer
* Amount you are borrowing and details of your lender
* Proof of deposit (bank statement)
* If a cash offer, proof of funds
* Timescale to exchange contracts and complete
* Your solicitor’s details
Offer an immediate deposit (10% or more) and get a survey carried out. ‘You want to appear as genuine and serious as you possibly can,’ says Trevor Abrahmson from Glentree International. ‘This is no time for buyers to be shy. If you hold back £50,000 on a £1 million property, you could lose. Over time, property is quite forgiving and prices go up.’
Almost as important as the bid is the accompanying letter. The trick is to find out as much as you can about the seller from the agent. A recent bid for a coach house in need of refurbishment and on sale at £465,000 was won by the lowest bidder.
Selling agent Harry Gammell from Strutt & Parker, Pangbourne, explains: ‘The couple wrote a warm letter to the sons of the deceased owner, saying they would restore the house to its former glory, as well as allowing the family to visit any time. This swung the bid in their favour.’ Another family won a bid by stating they were happy to adopt the seller’s donkey, pony and dog that would have to be left behind.
Sealed bid tips
* Never say you’ll strip out the place in front of the owner
* Ask for a lockout period when the house is off the market if you win
* Try to meet the vendor and press the flesh so he remembers you