Mortgages  

Sealed bids bring added grief to market in recovery

The principal of London-based Ash Ridge Asset Management said many agents she worked with had moved to sealed bids with several period, converted or other coveted properties.

However, this meant clients often had to walk away from the process if they could not buy the house outright with cash.

The practice, where offers are submitted secretly so the seller can assess who is best placed to buy, has been widely reported by brokers in recent months as the National Association of Estate Agents, for the first time in its history, recently issued guidance to those forced to make sealed bids.

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Ms King said: “The problem is that clients have not an idea how to pitch their bid and can lose out by the slimmest of margins. Should clients need a mortgage, they have to rely on the lender’s valuation being similar to what they’re willing to pay.

“It is so frustrating because you can get an agreement in principle, with all the paperwork completed, only to see clients being outbid at the last minute.”

Ms King said she advised clients not to get involved in multiple rounds of sealed bids as it could “take over their life. It is so tempting to get involved in the auctioneering, to put in another £100,000 but clients can get so upset and miserable. The property is seldom worth all that pain.”

Ian McGrail, managing director of national broker First Mortgage, said: “We have seen a return to the pre-crunch era of sealed bids and while it is a good sign for the market, it is worrying for buyers.”

The secrets of sealed bidding

1. Sell yourself by pointing out your best traits as a buyer (e.g. cash bid, already secured a mortgage)

2. Avoid round numbers – e.g. submit a bid of £200,103 instead of £200,000

3. Don’t offer to pay more than you can afford

4. Get as much information about other bidders as possible

Source, NAEA