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Sealed Bids

When it comes to purchasing your new home, there are many ways to put in an offer on a property or negotiate the price, and it can also vary depending on what part of the country you are in. In Scotland for example the price advertised is usually the minimum you would pay, with ten percent expected to be offered on top of the price. Different agents or sellers may negotiate differently, or state clearly that offers should exceed a certain amount. Whatever the situation it is a good idea to find out what the requirements are in order to put forward an offer. Ask the agent or seller what their usual process is before putting any kind of offer forward.

In most cases, offers are submitted via an estate agent where negotiations begin but occasionally offers will be made on a property using sealed bids. In this case, you will need to write your offer down within a sealed envelope, where the seller then chooses the highest bid. There may be a date or time of when all bids are to be received, before the seller then opens them all to reveal the offers. The idea of this is that people submit their highest bid for fear of being outbid by another potential buyer, which is good for the seller as they will often exceed their asking price in this way.

Sealed bids are still less common than open offers or bids, but are becoming much more popular in places such as London where there is a higher demand for properties. Although it can help the seller to achieve a better price, it can be very frustrating for buyers submitting their bid, particularly if you have your heart set on a specific property. Even if you are in a strong position and can help the seller achieve a quick house sale, your bid is only likely to be accepted if it is the highest. And although it may be tempting to put in a higher offer, it is extremely important that you stick to your agreed budget or you could run the risk of being accepted for a property you can ill afford. Your mortgage company may not cover the higher price if you are accepted also, so ensure all of your finances are in place before committing to any high offer.

Despite sealed bids being frustrating and stressful, there are also many advantages to the buyer, as you are not dealing with a middleman such as an estate agent who can often put undue pressure on you. Instead you only offer what you feel the property is worth. It is worth trying to find out how many other people have expressed interest in the property as it may help you to estimate how much to bid but it usually just comes down to what you are willing to pay. And even if a bid is accepted, it may still be possible to negotiate with the seller. This isn’t good news if your offer is the one which has been accepted as you could find yourself being gazumped, particularly if your offer is the absolute highest you can go, but if your offer is rejected you could consider increasing the accepted bid, providing of course you can afford it and it is covered by your lender.

by Cormac Henderson

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