Sealed Bids

oceanscape

Quick question - we are hoping to buy a house that is being sold by way of "sealed bids".

This website: http://www.independent.co.uk/life-style/house-and-home/property/sealed-bids-i-thought-we-had-it-in-the-bag-451827.html says:

If the agent has failed to say they will not accept referential bids, then you are free to make an offer saying you will pay £5,000 more than the highest bid. The agent is obliged to take this to the vendor, who will often accept. Agents hate this, but 80 per cent of them forget to rule out this type of bid, so be aware.

Is this true? The agent has NOT said they will not accept referential bids, but I cannot find ANY other info AT ALL about this issue. That website seems to be the one and only online reference to placing a referential bid in the context of a house purchase...........anyone have any ideas or advice??

Thanks!!

Radiantsoul

The whole bidding process is not binding until exchange of contracts so you can always bid higher.
I would have thought the agent ought to pass on the offer, as they are supposed to act in the best interest of their client!

oceanscape

Radiantsoul wrote: »

The whole bidding process is not binding until exchange of contracts so you can always bid higher.
I would have thought the agent ought to pass on the offer, as they are supposed to act in the best interest of their client!

Yes, I am aware of that. But presumably the whole point of sealed bids is that the vendor will (likely) choose the highest, or one of the highest with a buyer in a good position.

We *really* want this place, so we are willing to go for a so called "referential bid" but I'm not sure if it's allowed or how it works, since there isn't much info on it. Like you say, since it is non-binding until exchange of contracts it seems - to me - that placing a "referential bid" is a win-win situation? We are almost guaranteed to be the chosen buyer, but if the price does turn out to be too high, we can pull out........

oceanscape

Another question: The agent told us we cannot view the property/make our sealed bid until the "open house" (in 2 weeks time). We have sold our house and are due to be exchanging contracts very soon. Can the agent really restrict us from making an offer or viewing before the open house? If we offered over the asking price NOW is there any chance they might cancel the open house and the sealed bidding process? Guess not, but is it worth a shot with a decent offer?

uk_property_expert

I would put an offer in writing and cc your solicitor incase they are playing games with a preferred buyer

princeofpounds

The law is that the agent has to pass on any offer made in writing to the vendor unless they have been instructed not to (i.e. the vendor would have to agree beforehand not to even see low bids or referential bids).

If you feel that an estate agent is blocking your route to the vendor never feel you cannot eventually go direct to the vendor if you can get their details from the land registry or if they live at the property. Although a minority of vendors don't like direct contact if you have a good reason it can be worth it.

The vendor, not the agent, will control any viewings, although the agent will facilitate them. In theory they should act as instructed but you never know if the vendor has said 'one open day only' (seems a bit odd to be honest) or if this is the agent making life easier for himself. They cannot restrict you from making an offer.

Finally, beware. Many many EAs will invent phantom competitor offers and generate esentially phony sealed bids situation. That's not to say this is one of those circumstances, but make sure you know what your budget is and stick to it - it's the only way you will avoid getting done over.

wessexw

So an offer in writing, does that include by email these days? Or does it mean and actual letter in the post?

princeofpounds

In theory email is written, but you want it treated with respect so I'd go with paper.

pie81

If you are going to make a referential bid, I would:

(a) bear in mind someone else may do the same - I am not quite sure how that would work but presumably if you say £5k above and they say £10k above then they will win. In other words making a referential bid doesn't guarantee you success.

(b) phrase it as an alternative, eg "We will offer either £5k above the highest offer made by another buyer, or £X, whichever is higher".

That way if the EA or vendor decides they don't like referential bids after all, then at least you have a non-referential bid on the table as well.

lellow_lorry

I made a similar bid recently on the basis of knowing the other bidders position(chain, and knew roughly what their max budget was) ...I offered to "match their offer" and put that to the vendor. ...
The agent refused to accept it on the basis they might offer way over the asking price.... which i knew they couldn't even offer the asking price. very frustrating

JQ.

Who's to say that the highest bid doesn't come from the EA's best friend - knowing that it won't be successful, at a level 10% more than all the real bids. Could be quite costly to you.