Best and Final offer (Sealed cover bids)

magn8p

Hi all,

I am sure you have all seen many such queries and offered your kind advice.

I am a first time buyer trying to buy a property in East Anglia where there has been a surge in the property prices of late.

I have viewed a house advertised for an asking price of £190K - 3bed end terrace 2010 build, still under NHBC warranty. EA told me that the house already had 4 offers before I viewed it - 2 at below asking price and 2 at asking price but all are in chain. The vendor showed interest since I am first time buyer (so I was told!)

I viewed the house (showed around by the vendor himself), I have told him how keen I am in buying the house (in hindsight I should have played it cool). So, a day later, I made an offer at the asking price (perhaps I should have offered slightly lower to begin with?). The EA took his time and when I called him he said due to the high interest in the property (5 offers in total), the owner would like to go for a Best and Final offer (sealed bid) in order to come to a conclusion.

Now this has put me in a dilemma -

Should I stick to my offer, since I have the first time buyer's advantage?

Or should I bump up my offer, if so, by how much?

Am I bidding against myself, if so how can I find that out?

Have I done anything wrong, something I shouldn't repeat while bidding for a house in the future?

Thanks in advance for your kind advice.

-Mags

ognum

Best and final offers means just that. Being a first time buyer in my opinion gives very little if any advantage.

East anglia, the area I know best is Cambridge (I'm pretty sure your house is not there as you wouldn't get a three bed terrace for £190k) has been pretty hectic so I wouldn't not believe your EA that he has five offers.

The only thing you can do if you want the house is do some research of the selling prices of similar properties, make your best offer, describe your position, first time buyer, size of deposit, ability to move fast etc. Then wait and see, let us know how you get on.

Wassa123

It depends what you can afford.

If you're happy to go 5.5k over you'll probably get it.
You may also get it for the asking price if you want to hold your position.

Each situation is different and you never know what people will do.

Our area is fairly popular and our experiences with best and final offers:
-We offered £25k over the asking price. We were still outbid.

-We offered £10k over asking price during normal negotiations. The vendors wanted to go to best and final as they had some other offers (that were lower, but they wanted to squeeze what they could out of people). We held at our price, and we still won it.
It fell through later but thats a different story.

-Our current purchase went to best and final offers, we won it at £10k under.


It depends on how popular it is, how much you want it, how much someone else wants it, and finding a balance without doing anything crazy.

As a FTB, yes we didn't like bidding over the asking price. But whats an extra £5k mean to you? How long would it take you to save that?

For us, 5k was 6 months rent. We'd rather overpay a bit then haggle for one that we may lose, and have to wait for the next one and pay a few more months rental fees. (Properties came up once a month or so)

magn8p

Thanks for your kind response.

You are quite right - you wouldn't even get a decent 2 bed flat for that price in Cambridge. The property is in a village near Cambridge. The market here is picking up by the day.

I am happy to improve my offer from £190K to £193K, is that too less?

-Mags

ognum

magn8p wrote: »

Thanks for your kind response.

You are quite right - you wouldn't even get a decent 2 bed flat for that price in Cambridge. The property is in a village near Cambridge. The market here is picking up by the day.

I am happy to improve my offer from £190K to £193K, is that too less?

-Mags

Know one can tell you. Your competitors will be looking at what houses have sold for near by, they will be looking at what else is on the market and will be deciding how much this house is worth to them.

We don't know what they are thinking! You have a 20% chance of getting this house as you up your offer your chanc should get greater it's a gamble!

Good luck!

magn8p

ha ha...thanks.

Another question I have is - Would the bank (offering the mortgage) be happy if I offer a price over the asking price?

Also, how reliable is Zoopla estimate?

Zoopla estimate for this property is £10k more than asking price with 99.5% confidence. And if that's reliable, I can offer up to £5k more than asking price (assuming the bank is happy with that).

HouseBuyer77

Being a first time buyer in my opinion gives very little if any advantage.

I'd say chain vs no chain does though.

I was in a similar situation, I offered at asking as did 3 other people. It went to best and final and I won despite not being the highest bidder (highest was 6% over I was 3% over, or so I was told...), though they did first come back to me and say they would accept over the higher if I pushed my offer up around £1000, which I did. I believe the reason they chose me over the higher offer was because I was an FTB (no chain) vs the others who had a two-house chain already.

How much do you care about the house? Are there many other options if you don't get it? It can be worth paying a premium to secure a property if you really like it, even if it's not really 'worth' that much.

HouseBuyer77

Another question I have is - Would the bank (offering the mortgage) be happy if I offer a price over the asking price?
The bank will do a valuation and lend based on that, it could even come in at under the asking price. Can't say for sure what it will say, does it seem overpriced compared to similar properties that have sold recently in the area or is it higher than asking prices for similar properties?

Also, how reliable is Zoopla estimate?
Not very

Answers above

missbiggles1

magn8p wrote: »

ha ha...thanks.

Another question I have is - Would the bank (offering the mortgage) be happy if I offer a price over the asking price?

Also, how reliable is Zoopla estimate?

Zoopla estimate for this property is £10k more than asking price with 99.5% confidence. And if that's reliable, I can offer up to £5k more than asking price (assuming the bank is happy with that).

Are you relying on a valuation at the higher amount for your mortgage or do you have a large enough deposit to cover the difference?

eddddy

magn8p wrote: »

I viewed the house (showed around by the vendor himself), I have told him how keen I am in buying the house (in hindsight I should have played it cool).

Just an aside - but no, it's not usually best to play it cool.

Telling people how wonderful their house is, how much you like what the have done with it, and how much you would like to live there...

...will make many people like you, and want to sell their house to you.


If you 'play it cool' and disinterested, but then make an offer...

... many people will guess that it was a strategy for getting them to accept a lower offer. So they are less likely to look on you and your offer favourably.

Where there are multiple similar offers, that kind of stuff can sometimes make a difference.

magn8p

Relying on valuation at higher amount for the mortgage. I wouldn't be able to fund the difference myself - I have just about the right amount to cover the deposit for 90% LTV.