We’ve been asked to submit a sealed bid for a house, what is this?
Your property query answered
Q We’ve found a house to buy. It’s been on the market for a while and we thought that no one else was interested. Now the estate agent says there are at least two other parties who want to buy it and he is asking us to submit a sealed bid. What is this? If we do submit one and we’re successful (and even if we are not), do we get to see the other bids?
A The sealed bid is a “best and final” sealed letter of offer backed up with as much relevant information as possible to support the bid. Preferably this should be delivered to the agent by hand in advance of the appointed deadline.
When a property is generating multiple bids and the process is dragging on, sometimes in the interest (and with the agreement) of the vendor, it may be prudent for the agent to opt for a sealed bid on a nominated date.
The final sealed bid will usually bring the best conclusive result for the vendor, provided there is continuous bidding in the lead up to calling the sealed bid method.
For the purchaser on the other hand, they will have to put their best foot forward and essentially put together the best bid they know they can afford rather than bidding against other known bids.
The advantage is a conclusion with potentially the reward of an agreed sale on a specified date. They will, however, have to be prepared to walk away if their bid is unsuccessful.
Bidders cannot know details of the other bids as this could entice further bidding after the sealed bid process has concluded. This would be unethical and would undermine the purpose of a sealed bid process.
On the other hand the vendor has the option of being present when the sealed bids are opened.
To be the successful bidder in a sealed bid, the following tips will increase the odds in your favour:
1. Your final offer letter should set out the final price you are prepared to pay for the property. Submit an uneven number. This could clinch it for you if competing with an almost identical bid.
2. Letter of loan approval in principle from your bank.
3. Letter from your bank, confirming what proportion of funds is subject to loan and how much will be cash (if relevant).
4. Identify if you are a first-time buyer and if your purchase is not subject to the sale of another property.
5. If your purchase is subject to the sale of your own property, a letter from your agent or solicitor confirming as much detail of your sale and its progress as possible.
6. Sometimes it can help if you outline, or give specific reasons why you want this particular house on this road eg if you have relatives living nearby or if children are attending local schools etc. Keep to relevant and factual information.
Roger Berkeley is a chartered residential agency surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie