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Buying with sealed bids - Jo Eccles, Sourcing Property

Sealed bids

Last month, I gave advice about making an offer when you’ve found the right property. This month I’m giving advice about what to do if the property you’ve found has interest from other buyers and you’re facing a sealed bid situation.

Sealed bids are often used when there are multiple offers on the same property. It tends to be seen as the quickest and cleanest way to resolve a bidding war, rather than play each buyer against each other until everyone is fed up and any goodwill or trust is lost. As well as giving all potential buyers a fair attempt at purchasing the property, sealed bids also aim to gain the best possible price for the vendor.

A set date and time deadline will always be specified and your offer must be received within that time; a late offer will lose you credibility as a buyer and may not be considered. In order to present yourself in the best light and maximise the chances of your bid being chosen, it pays to be organised and the more information you give, the better.

Write an official letter stating your maximum offer (ensuring that you can afford it), outlining who you are and what you do. Include details of your financial situation and your timescale for moving. Always mention anything that makes you look like a good buyer, such as paying cash, having no chain or already having your mortgage offer in principal.

Certain details could sway your vendor depending on their motivation. For example, if your vendor has found a new property to buy and they have to fit in with a particular time scale, if you’re able to accommodate their timings, they may choose to accept your offer even if it’s lower than a competing buyer who can’t fit in with their time scale. Or as another example, if your vendor has been messed around in the past by a previous buyer, they may simply want to chose the most reliable, credible buyer. This means that if you are perceived to be a better buyer due to your circumstances, you might win the bid, even if someone else has made a higher offer.

Having a mortgage broker and solicitor in place can improve the strength of your position and it’s therefore advisable to include their details within your letter as it demonstrates that you are in a position to proceed quickly. If possible, it might even be better to instruct your solicitor to write the letter, to give you more credibility.

The most important thing to remember is be transparent with your situation. If you say you are a cash buyer, you might be asked to prove it with bank statements and it won’t be looked upon favourably if you’re caught out.

If you do manage to win the sealed bids, you will need to aim to exchange contracts as soon as possible – if not, you run the risk of the seller switching to one of the other competing buyers. Therefore, it’s essential to instruct a good solicitor and mortgage broker who can act quickly.

Jo Eccles

Jo Eccles is Director of Sourcing Property, an award winning and independent London property search company. She is also a widely regarded property expert and frequently comments on the property market in the national press and on TV, appearing as the property and relocation expert on London Tonight, BBC News, BBC2's Daily Politics programme and ITV's Homes & Property series.

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