Question about sealed bid

Pandilex

Hello, I put an offer on a house yesterday at 6k above asking price (210k property). Today I heard that they're going to sealed bid due to 14 'similar' offers being made.

Do you think it's better to stick with my bid or increase it further? My goal is obviously to get the house for the lowest possible price.

I'm not sure if the sealed bid procedure is just a way of getting everyone to bid a bit more or not. Any thoughts?

jjlandlord

Sealed bid are designed to make bidders submit their best offers because they do not know the levels of the competing offers.

As such, I would say that what you can do is work out what you would be happy to pay, and offer that.
One trick, though is not to offer an amount as a round number but slightly and randomly higher. E.g. you're considering offering 220k so offer 221,570k or something. That way you'd beat all the others who stuck to the round number without breaking the bank.

flea72

Sealed bids mean nothing. As you say its just a tactic to get people to offer more. Once bids are in you can always come back with a counter offer. Depending on sellers viewpoint, they will accept highest sealed bid and stick with it, or keep accepting offers until they have bled all interested parties dry.

Sealed bids is a common tactic used on repossessions, in which case you need nerves of steel, to cope with all the encouraged gazumping

Jenniefour

Pandilex wrote: »

My goal is obviously to get the house for the lowest possible price.

Getting the house at the lowest possible price is completely at odds with the reality of the situation you're in!! If you're looking for a bargain then this might not be the property for you.

If you're still seriously interested in this property then decide what your maximum offer will be based on what you can realistically afford and/or what you're prepared to pay for it. And include any information that the vendor might be inclined to view favourably.

Sealed bids is a way of getting a higher price where there are lots of interested potential buyers although the highest bidder may not be the one chosen if others are in a better position to proceed.

flea72

jjlandlord wrote: »

Sealed bid are designed to make bidders submit their best offers because they do not know the levels of the competing offers.

As such, I would say that what you can do is work out what you would be happy to pay, and offer that.
One trick, though is not to offer an amount as a round number but slightly and randomly higher. E.g. you're considering offering 220k so offer 221,570k or something. That way you'd beat all the others who stuck to the round number without breaking the bank.

It makes no difference. This isnt ebay where the incremental bid wins, so you dont need to outbid someone by 1p. The seller is under no obligation to even accept the highest sealed bid. They can sell to who they want.

Tactically i wouldnt up my offer. But would comeback once all other bids were in. If i thought the house was still worth it, i would then think about joining the bidding war

Jenniefour

flea72 wrote: »

Once bids are in you can always come back with a counter offer.

That's not true. Normally with sealed bids it's wiser to regard it as your final offer.

Good tip from jjlandlord on not offering round number.

da_rule

You should consider the sealed bid your final offer and go as high as you comfortably can. However, the seller is under no obligation to select the highest bid (or any of the bids).

I have seen some sealed bids where as well as offering money they offered other information, like "no chain can complete within X weeks".

Pandilex

This is a very hard decision to make. But with 14 bids (which is a value I can believe as it was open house viewing and the place was rammed with people, several of which gave offers on the day via slips of paper) it looks like maybe I should bid even more. I am just rambling. It's finger in the air. Thanks for the advice

It would be nice to know how much over asking your average property goes for in the area though. Hmm.

Jenniefour

Pandilex wrote: »

It would be nice to know how much over asking your average property goes for in the area though. Hmm.

I wouldn't spend much time on that kind of speculation. I'm assuming you're in a 'hot' area like London so the most important issue for you to consider is the maximum you can realistically afford/willing to pay and anything else that might make your offer more attractive e.g. you have nothing to sell, big deposit, mortgage lined up, can be flexible with completion times and so on.

Campervanman

The additional information which shows you are in an excellent position to proceed often tips in someones favour - no chain etc and is always worth stating. Go as high as you can afford, local property research suggests its worth and you feel the property is worth to you. Imagine in a couple of weeks time some said 'it went for £xxxxk' . Would you think 'I could have offered that and now Ive lost the property' or 'that is fair but above what I was willing to pay for it'.

flea72

Jenniefour wrote: »

That's not true. Normally with sealed bids it's wiser to regard it as your final offer.

Good tip from jjlandlord on not offering round number.

Sealed bids are not binding. So it doesnt matter who has the highest bid. Until you exchange the seller can accept any offer. So offering an odd number, or stating its your final offer has no bearing on whos offer is accepted

So if i put in a sealed bid of £200k and someone else offers £200,000.54, you think that 54p makes a difference. and if i counteroffer with £201k, the seller will,stick with the highest bid?

Most people will want to sell their house to the highest bidder so will keep accepting offers until its not worth their while