Sealed bids or “best and final” offers are becoming an increasingly common way for sellers to choose their buyers in today’s ‘sellers market’. The result? Desirable properties fetch well over the asking price and buyers are put under pressure to offer as much as they can afford, rather than what a surveyor might argue the house is worth. It is a very stressful and daunting process for buyers – and there is no standard way to approach every bid situation – but there are some tactics you can employ to gain an upper hand in the process:
1. Background information is vital
Try to get as much information as possible about the seller to give you an edge over your competitors. Knowing your opponents can also be helpful. Agents will often let you know what offers were made prior to the sealed bid process and how many they expect to receive. They may even let you know how you fare in comparison to other bidders – for instance if any are cash buyers or if they still have a house to sell themselves.
2. It’s not all about the money
The winning bid is not automatically the highest. Sellers might want their home to go to someone who will love it as they have, or they might just want someone who can move quickly; this is where your background research comes in useful. Make sure you highlight exactly how you fulfil what they want from an offer. If you’re a cash buyer who can complete in 3 weeks, tell them this and provide the evidence. If you’re a family who sees this as their forever home, write a heartfelt letter and maybe even stick in a photo of your family. Add an extra 52p to the bid from little Daisy’s piggy bank and tell them she wanted to use it to help buy the house she loves so much. Treat it like a game – you need to use every possible card you have if you want to win!
3. Reliability versus cash
Traditionally the cash buyer has been seen as the nemesis that all sellers would choose over anything else – so much so that they can sometimes offer less because of the security that the cash provides. However, recent stories in Winchester have shown some cash buyers to be skittish and fickle, making offers on several houses at the same time and pulling out of a deal when they find something better. Here’s where you can have the advantage if you’re not a cash buyer – emphasise your reliability and your commitment to the purchase.
4. Get your survey done before your bid goes in
Most people will make their offer “subject to survey” so if you instruct your survey before making your bid you can state that your offer is NOT “subject to survey”. This means your offer is what you intend to pay whilst others might try to renegotiate after a survey. Although this obviously has cost implications it can be a real plus for a seller who might have already had experience of someone pulling out or trying to knock money off after a survey. We dealt with a buyer recently who won a bid almost £50,000 lower than the highest offer, mainly because the buyer had done the survey in advance – the house had previously subsided so they had good reason!
5. Consider the £2,000 over the highest offer trick
A new but potentially risky strategy is to submit a bid stipulating that you will pay £2,000 or £5,000 over the highest offer on the table. It is not against the rules but, in our experience, we would only advise using it with extreme caution. In the right circumstances (as we’ve seen in two instances recently) it can be a very clever way to play the game and secure the deal if the highest price is the seller’s goal. If the winning amount is over your budget, you can simply pull out and it moves to the next bidder.
6. Remember that a sealed bid, like any offer, is not legally binding
Many people assume the sealed bid is legally binding, however it is not binding to either party until contracts have been exchanged, as with any offer. Sellers can still accept a higher offer should one of the parties who has lost out (or a new buyer) submit a counter offer. On the buyer’s side, you can still negotiate the price down if your survey throws up nasties like damp or movement and you can of course still walk away if you change your mind. A word of warning though, in cities like Winchester where everyone knows everyone, news of behaviour like this travels fast amongst the estate agents and you can soon be labeled a time-waster if you pull out of more than one deal for no good reason.
7. Check the date, time and rules of the bid
The estate agents will send you a letter or e-mail with the timings and rules of the bidding process, so make sure you don’t miss the deadline by mistake or leave out a key point they have asked for. It sounds obvious, but when emotions are running high it’s amazing how easy it is to misread a simple set of instructions!
8. Deliver your bid just before the deadline
You don’t want to give anyone the chance to leak your bid to competitors, so try to leave delivering your bid until the last possible minute and then check that it has been received.
9. It’s not over until the contracts have been exchanged
If you don’t win the bid but love that house with all your heart it is worth staying in contact with the agent to see how the sale is progressing. Bidders often get carried away with the process and then later regret their decision and pull out. By keeping in touch with the agent you are showing them that you are keen and therefore more likely to last the long journey from offer to completion. We hear so many stories of people who didn’t win a sealed bid initially but succeeded later when it was re-offered to them.
10. Sign up a search agent like ScoutBee!
We’re well practiced at sealed bids, tailoring our approach to each situation, and can give good advice on how to play your hand. We are also objective and don’t have the emotional pull that can sometimes cloud your vision and make you offer way more than you might otherwise. We take care of all the information gathering, advise on the bid application and keep in constant contact with the estate agents to ensure you don’t miss anything important.
Having a search agent on your side also adds weight to your offer. Estate agents see these offers as more reliable as the buyer is serious enough to have paid someone to help them with the process. Buyers who use a search agent are also seen as more likely to complete a deal as they have a professional on board to keep the communication between all parties going smoothly and to help with any problem solving that might be necessary. Why not get in touch to discuss the process further.