Find out how you can have the best chance of making the winning bid on your dream home.
What are sealed bids?
In the housing market, “sealed bids” is when potential buyers put in a confidential offer on a property. Buyers need to put in their offer by a deadline, and then the seller chooses. It’s not necessarily always the highest bid that wins, although more often than not – it is.
Sealed bids are used when the seller can't decide who to sell to or when a property
receives a lot of interest.
Unless you're in Scotland, where acceptance of a sealed bid is legally binding, winning a sealed bid doesn't mean you can't be 'gazumped'. Gazumping is when a buyer's offer is accepted, but it falls through because another buyer makes a higher offer - which the seller accepts. Gazumping can only happen before an exchange of contracts.
Are sealed bids legal?
Yes, sealed bids are legal and are the norm when buying a property in Scotland.
How do sealed bids work?
If you’re looking at a property that’s taking sealed bids, there’ll be a closing date by which you’ll need to have submitted your bid. This will gives you a chance to view the property and then go away and consider your best offer.
When you've decided on your offer, you should submit it to the agent (or the seller if they're not using an agent) in a sealed envelope. On the closing date, all bids get reviewed before a winning bid is chosen.
Submitting a winning bid doesn’t mean you have to go through with the house purchase. The house buying process works the same way as with the traditional offer system. For example, if you discovered a problem with the property on the survey, you could renegotiate the price or back out.
How do you win a sealed bid?
Putting in your offer
The bid you put forward will depend on how much you want the property and what you think it's worth. If you can find out how many other bidders there are, it will give you an idea of the demand and help you decide on your offer. If you love the property, you should make the highest offer you can afford without paying over the odds. Don't end up offering so much that you end up with no room in your budget for solicitors or are stretching yourself with the mortgage.
Make your offer stand out by adding a few pounds to it. For example, instead of offering £160,000, offer £160,105. Doing this will catch the seller's eye and decrease the chances of putting in the same bid as someone else, which could hold the decision-making process up.
Sending a letter
It’s a good idea to submit a letter to the seller with your sealed bid. A letter will make it more personal and persuade the seller that you're the best bidder. Apart from appealing to their personality and telling them why you love their house, you could include practical details to give you an advantage. For example, if you're not in a chain, tell them this. If you've got a mortgage in principle agreed or a legal team in place, let them know. Anything you can say to show the seller you’re serious and in a position to move quickly will give you an advantage over the other bidders.
When you’ve finalised your offer and your letter, hand-deliver it to the agent or seller to ensure it doesn’t get lost in the post.
If your bid is accepted, you can still get gazumped before exchanging contracts (unless you're in Scotland), so aim to move the sale along as quickly as possible.
Read on to see if you should buy a house during the stamp duty holiday.
Disclaimer: All information and links are correct at the time of publishing.BACK TO BLOG HOME