Best and Final Offers.

Kaeuqs

I was wondering what people's thoughts are about making "Best and Final Offers"/"Sealed Bids"?

A house we are interested in is being sold by the above process. We have been told that there has already been offers at 10% and 15% above the "Guide Price" (£425K). The response has been that it will go to Best and Final Offers and that's that.

I have been told that there is 10 bid packs going out to interested parties.

The house itself needs a lot of work (it's not been lived in for 2-3 years)........I know we're in for ca £200k work. We're potentially going to have to put a bid in of ca £450 - £500k to purchase.

We are lucky in that we have already sold, and have arranged a mortgage valuation (I'm aware it's mostly to protect the mortgage company). I haven't have structural surveys / housebuyers surveys done.

We are looking to buy our home, we're not looking to buy the property purely for financial gain (obviously it'd be nice to make money or at least not lose money but it's not the main aim)

My questions are:
1) What to set the bid at - no idea whether the previously received offers of £450k and £475K were subject to conditions - and therefore whether a "clean" (not subject to survey with mortgage agreed) would justify a smaller offer?
2) Is it justified to do more thorough investigations (surveys)? We already know that there is significant expenditure to be undertaken - we have a contingency fund if required. From my perspective, there is a limit to the amount of money I want to spend on a house for which I have not had an offer accepted, and 10 potential competitors (therefore limited prospects of winning).

I was wanting some feedback/thoughts to assess whether I am being "Penny-wise, Pound-foolish".

Mr_Moo_2

What did the mortgage valuation come in at compared with the alleged offers over already received? Your lender will look at their valuation as opposed to the bidding war frenzy price that you may end up getting wrapped into.

How badly do you want the place?

MX5huggy

This process is not binding, if they wanted that then they should just have an auction.

Bid high, win, send in a surveyor get a true value and cost of works, then readjust your offer. I have done this successfully (although it was 2004).

Kaeuqs

"What did the mortgage valuation come in at compared with the alleged offers over already received? Your lender will look at their valuation as opposed to the bidding war frenzy price that you may end up getting wrapped into."

This is the problem I've always found with surveys/valuations, is that they do not value a property, but instead determine whether it is a asset worth lending against. We've stated to the mortgage company that we'll go up to £500k.
The valuer/surveyor hasn't visited yet, due to go out today/tomorrow/Friday. It'll be telling if they put any retainers on the loan, for example, on having the roof replaced, etc, etc.

"How badly do you want the place"?
Unfortunately we've been looking for 2 years, due to the requirements of land, financial limitations, location etc, etc - Therefore, that and the fact that we've already outlayed £600 for the survey/valuation means that we want this property. I personally are prepared to offer more than the asking price if required, I just don't like the prospect of being suckered by an EA and the fictious "we've had so much interest, and offers of ...." - yet I also don't like wasting money on surveys on properties that I don't end up purchasing.

"This process is not binding, if they wanted that then they should just have an auction.

Bid high, win, send in a surveyor get a true value and cost of works, then readjust your offer. I have done this successfully (although it was 2004)."

The bid pack states that "Offers submitted which are subject to survey or valuation will, in all likelihood, be less likely to be recommended". Therefore, my understanding is that if you wnat to use your strategy of relying upon a latter survey, then the offer has to be made "subject to survey", otherwise it is binding (all the offers are "subject to contract"), I will ask the solicitor. I think it is clear, if we put in an offer "subject to survey" then the offer needs to be financially very enticing - which then needs to be negotiated down.
MX5Huggy: Does this sound similar to those you had in 2004??

MX5huggy

The advice I received was that nothing is binding on either party, until exchange so I would not mention your plan to survey the place in your bid.

Kaeuqs

I will speak to solicitor tomorrow to discuss.

If there is no commitment on either party until contract exchange, then why are offers made "Subject to contract" or "Subject to Survey"? I'm not saying you're wrong, but it seems that these words would be superfluous.

When I bought my first house, I bought one of those self-help/guide books to the house purchase process, and it stated that any offer should be made "Subject to Survey" (unless the survey is done).

In the bid pack, it states that you must indicate whether it is a cash offer, an offer requiring a mortgage and if requiring a mortgage that survey and valuations have been done. The bid pack is to be signed. We also have to declare that the purchase can be completed 4 weeks after the closing date.

It does state on the bid pack that "It does not constitute a binding contract of sale", so I suppose in principle your strategy could work. Offer high, claim that survey/valuation is done, get foot in door, do actual surveys/checks, re-negotiate to lower price dictated by offer from second best offerer - a better indication of true market price.

Kaeuqs

Thanks to the tips here regarding the use of Property-Bee, which i have now downloaded to my computer, I can see how properties that we are interested in have gone up and down by quite significant amounts compared to original marketing prices.

If the Estate Agents cannot get the original marketing price somewhere close to market value...........how am I, in a sealed bid process (no feedback) supposed to do it?

I can see why some purchasers refuse to get involved in Sealed Bids.