If bidding in seal bid sale should one make their maximum bid immediately?

Jemma01

I just put an offer on a house, I wanted a chance to negotiate, but the agent said we're looking for the highest bid and that would be it, so I had to put my best offer in. There was no negotiation after that, they got a higher offer than mine, but they thought I had a higher chance of securing a mortgage, so they accepted mine.

eddddy

Out of interest, are you talking about genuine "sealed bids" which are only opened on the closing date...

... or an "informal tender", where the estate agent reads the bids as they come in?

I mostly come across "informal tenders".

The key difference being that with "informal tenders", you can often get insight by having "chats" with the estate agent.


As an example, I was interested in a property being sold by "informal tender" with a guide price of £300k. But the estate agent told me that I'd need to put in a bid of around £360k to stand a chance of winning.

I didn't bid in the end, but I later found out it sold for £361k.

Herzlos

Albermarle said:

GDB2222 said:

GervisLooper said:

Mark_d said:

A sealed bids process is much easier to manage than a regular auction.  People might bid the maximum they're willing to pay.  No-one gets caught up in the adrenaline of an auction, and ends up paying more than they can afford....Additionally for the seller, they see everyone's final bid at the same time, so they get a very good price for their property. It's very much a gamble for the buyer - you can make a high offer to give you the best chance of securing the purchase...but you might end up paying a lot more than you needed to.

With a regular sale, a potential buyer makes a reasonable offer at the earliest opportunity.  The seller then makes and decision and if accepting the offer, they take the property off the market.   The buyer can get a good deal if they make a reasonable offer quickly.  The buyer doesn't have to start with their maximum bid because they can increase their offer in negotiation with the seller.

I think you'd be in a mess if you win the auction on multiple properties.  I believe there is an obligation to proceed with the process.

I think the fairest system would be standard auctions...but whatever system is used, if you're at a disadvantage as a  buyer then you will likely be at an advantage when you are selling.

If you didn't win in that 'one shot' once the bids were reviewed is there no later negotiation? Just a once chance thing?

For instance on a private treaty where I gave a low bid recently - in hindsight I think the agent was stringing me along as they told me early that it would be lower and then suddently a -correcttion- and I read that this is a common tactic they use to drum up false interest.

I was blown out of the water quickly as others came in but when enquired about the price - as the agent stopped updating me now he had 'real buyers' he told me they were in 'best and final offers' stage.

Now I could not compete at that price for that one but wondered if there are best and final offers for sealed bids or not since it would undermine the whole thing and the first bid is final?

Sealed bids is usually the end of the process. 

Based on my experience in another industry, my question is what happens if the highest sealed bid is from someone in a long chain, and the next highest bid is from someone with nothing to sell?
I suspect there would be further discreet negotiations to try and get the one with nothing to sell to up their bid ?

There's nothing forcing the buyer to take the highest offer.  In Scotland at least they'll announce a deadline for bids to be in (called Closing), at that point the EA and seller will review the offers and the seller will pick one based on whatever non-discriminatory criteria they want.

We lost out on a house because the seller took a lower figure for the chain-free sale. We were then in a good position for the house we eventually got because the EA was confident we'd sell quickly (and was correct, we'd closed 7 days after going on the market) though we also had the highest offer (by about 2%).

When we reviewed the offers the EA told us the offer price and the chain details. We'd decided that if it was close we'd take the one with the shortest chain, but the bids had a £10k spread and the highest bidder had already sold their house to a chain-free buyer so we went with that.

GervisLooper

Jemma01 said:

I just put an offer on a house, I wanted a chance to negotiate, but the agent said we're looking for the highest bid and that would be it, so I had to put my best offer in. There was no negotiation after that, they got a higher offer than mine, but they thought I had a higher chance of securing a mortgage, so they accepted mine.

How were you able to find out information about the other bidders?

GervisLooper

eddddy said:

Out of interest, are you talking about genuine "sealed bids" which are only opened on the closing date...

... or an "informal tender", where the estate agent reads the bids as they come in?

I mostly come across "informal tenders".

The key difference being that with "informal tenders", you can often get insight by having "chats" with the estate agent.


As an example, I was interested in a property being sold by "informal tender" with a guide price of £300k. But the estate agent told me that I'd need to put in a bid of around £360k to stand a chance of winning.

I didn't bid in the end, but I later found out it sold for £361k.

It is the former I think because it says offers must be sent to X address and will be opened on Y date, over a month from now in July.

Hmm just thinking, this wait is enough of a nuisance but then it could be another month before getting it all sorted couldn't it?

I will be bidding for (wood)land btw which should be more simple than for bricks and mortar I guess.

Bookworm105

?
obviously a sealed bid means you bid your max since (QED) you do not get a second chance

Jemma01

GervisLooper said:

Jemma01 said:th

I just put an offer on a house, I wanted a chance to negotiate, but the agent said we're looking for the highest bid and that would be it, so I had to put my best offer in. There was no negotiation after that, they got a higher offer than mine, but they thought I had a higher chance of securing a mortgage, so they accepted mine.

How were you able to find out information about the other bidders?

The agent told me. They didn't tell me how much more.

eddddy

GervisLooper said:

It is the former I think because it says offers must be sent to X address and will be opened on Y date, over a month from now in July.

Hmm just thinking, this wait is enough of a nuisance but then it could be another month before getting it all sorted couldn't it?

I will be bidding for (wood)land btw which should be more simple than for bricks and mortar I guess.

If you're bidding for woodland - I guess it might be a 'niche' estate agent, rather than one of the 'respectable' high street estate agents.

So I would check their terms very carefully - there might be some very 'unexpected' terms.


In particular, is your 'sealed bid' unconditional and binding? i.e. If your bid is accepted, are you then contractually and legally required to buy the woodland?

Or can you walk away, for example, if your solicitor finds a problem with the title or searches. (If your bid is binding, maybe you want your solicitor to do their checks before you bid.)


And if bids aren't going to be opened until a date in July, there's no real point in making your bid until a day or two beforehand. (In case you find something else you prefer in the meantime.)

user1977

eddddy said:

GervisLooper said:

It is the former I think because it says offers must be sent to X address and will be opened on Y date, over a month from now in July.

Hmm just thinking, this wait is enough of a nuisance but then it could be another month before getting it all sorted couldn't it?

I will be bidding for (wood)land btw which should be more simple than for bricks and mortar I guess.

And if bids aren't going to be opened until a date in July, there's no real point in making your bid until a day or two beforehand. (In case you find something else you prefer in the meantime.)

Or in case your bid somehow becomes "unsealed" to enable somebody to offer just over it. Normal practice in Scottish closing dates is to fire in your offer at the last minute to deter that sort of shenanigans.

GervisLooper

eddddy said:

GervisLooper said:

It is the former I think because it says offers must be sent to X address and will be opened on Y date, over a month from now in July.

Hmm just thinking, this wait is enough of a nuisance but then it could be another month before getting it all sorted couldn't it?

I will be bidding for (wood)land btw which should be more simple than for bricks and mortar I guess.

If you're bidding for woodland - I guess it might be a 'niche' estate agent, rather than one of the 'respectable' high street estate agents.

So I would check their terms very carefully - there might be some very 'unexpected' terms.


In particular, is your 'sealed bid' unconditional and binding? i.e. If your bid is accepted, are you then contractually and legally required to buy the woodland?

Or can you walk away, for example, if your solicitor finds a problem with the title or searches. (If your bid is binding, maybe you want your solicitor to do their checks before you bid.)


And if bids aren't going to be opened until a date in July, there's no real point in making your bid until a day or two beforehand. (In case you find something else you prefer in the meantime.)

Not niche, while there are a couple that sell only woodlands they don't do it with the bidding structure and rather put a price on their website and you pay what is advertised, firrst come, first served.

The majority are listed on onthemarket and estate agents just tack them on to there normal property listings. Due to the relative price being a lot less then the average house you do get the impression it is a low effort affair for the agents since they won't get much commission compared to their normal sales. Map marker miles away from actual location, just a sparse generic sentence or two for the description. Often only a couple of photos. Curt low effort responses to emails and such.