It seems that barely a day goes by without some expert or other predicting a crash in house prices - but despite this potentially gloomy outlook, the housing market still seems to be doing well, especially when you consider that the most desirable properties can attract interest from as many as 100 prospective buyers.
Managing the offers from so many interested parties, and dealing with the offer and counter-offer process can be time consuming, and when this happens, estate agents are increasingly inviting offers through a system of sealed bids.
This might sound a touch shady and mysterious but sealed bids are an attempt to make the bidding process fair and speedy.
Basically, all the interested parties are asked to submit their best and final offer' in writing by a specified date. The bids are then opened and passed on to the vendor for them to decide who gets the property.
Very often the winner' is the person who makes the highest offer, but vendors might be keen to take other factors into account, such as the lack of chain, a cash sale or whether the mortgage is agreed, so it is always worth including this kind of information in the bid along with the price.
In principle, sealed bids help to prevent the dreaded gazumping', where the seller accepts a higher bid after agreeing to sell it to someone else.
But although most people do play fair, sealed bids are not legally binding and there is nothing to prevent the sellers accepting higher bids at a later stage.
Another pitfall for the potential buyer is that it can be hard to know what amount to bid. Too low and you could miss out on the property by a frustratingly small margin, pitch too high and you could find yourself paying well over the odds. It's not unheard of for some people, keen to make the top bid, to offer considerably more than the asking price, only to find that they have over-bid by thousands of pounds. But if you research the local market and only offer what you can afford you should be able to get the balance more or less right.
It is impossible to guarantee that you will make the winning offer but many people advise bidding an odd number of pounds - £101,003 for example - to avoid tying with another bidder.
Although getting the price just right can be a question of luck, sealed bids can take a degree of pressure out of the buying process. Rather than rushing to make an offer, the sealed bid deadline gives you time to think, to arrange your finances and check out the local area. If you are not lucky enough to make the winning bid, the sealed bid system can remove some of the frustration as at least you know that you have been outbid and the property is now off the market.
For vendors, the sealed bid system is a good way to find out the real value of your property. It removes the pressure of the offer and counter-offer process and although there is no obligation to sell to the highest bidder, there is a chance that someone will make a bid higher than you ever expected - after all, this is a market in which anything can happen.
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