Buying a House > Sealed Bids

In a growing, high-interest property market, the sealed bid has made a swift comeback. So swift, in fact, that in some areas of London the sealed bid auction is now the most common way of buying a house. The system commonly results in a good price for the seller, but can also have some key benefits for the buyer, too.

So, What Exactly is the Sealed Bid?

In short, potential buyers will submit their bids – their best and final offers – in a sealed envelope prior to the auction’s closing. Then, the seller, after reviewing the offers, will (normally) accept the highest bid. It’s common for these offers to exceed the market value of the property, as bidders tend to miscalculate value when they are unaware of what their competition is offering.

Despite this, the sealed bid is seen as a ‘fairer’ way of auctioning, and it’s a great way for a seller to get a good price for the property (particularly if the property in question is of high-quality and likely to garner a high level of interest). Partly, this is because if none of the bids meet the seller’s valuation, they are under no legal obligation to accept an offer at all. This also means, however, that there is little preventing the winning bidder from changing their mind at the very last minute and pulling out of the deal altogether.

With no legally binding contracts, direct negotiation or knowledge of other bids, the sealed bid auction is arguably one of the more nerve-racking and stressful ways of buying a house. Those who lose out often wish that they had bid more, and those that win can often feel like they have overpaid (given that they are the only bidder to value the property at such a high amount).

What are the benefits of sealed bids?

Nevertheless, there are some benefits to buying through a sealed bid auction.

Firstly, due to the secrecy of the bid, you won’t have to worry about being pressured by either an estate agent or a seller. Secondly, a sealed bidding process means you’ll avoid the escalating costs of a bidding war, and perhaps save money on the purchasing costs. Thirdly, by bidding wisely (and with the following tips in mind), you can give yourself a good chance at winning without overpaying.


5 Tips for Sealed-Bid Auctions

It almost goes without saying, but you should never offer more than you can afford. Contrarily, given the very nature of a sealed-bid auction, there is little point in making a very low offer, either. Ideally, your offer should be influenced by the recent property sales in the area. Do your research!

  • Never submit a round-figure sum. If you value a property at £300,000, you should bid a little extra on top. This will ensure that your bid exceeds others who value the property at the £300,000 price.
  • Write a detailed but concise covering letter. Discuss how you will fund the purchase, and give the details of your solicitor and mortgage provider. Such a cover letter shows clear intent and means to purchase, and may see your bid accepted ahead of higher bidders.
  • Have the property surveyed prior to bidding, as a “subject to survey” condition may deter some sellers.
  • Hand in your bid just before the deadline, and in person if possible.
  • If you lose out, don’t be too disheartened. You may well still be considered for the property (if the winning bidder pulls out, for instance). And even if this isn’t the case, there are other properties out there and you’ll find the right one sooner or later!

If you’re lucky enough to win the auction, you’ll probably need some help moving into the property. For all the hints and tips to make your move as smooth as possible, c. buzzmove lets you compare quotes from vetted and insured removal companies, quickly and simply – ensuring you get the best deal on your move.