What does 'Sealed Bids' mean when buying a property?

"... is a trap here that no end of first time buyers fall into. They go out looking in November just to see what is around and get an idea of prices. They decide to wait until the New Year to see more choice. In the New Year prices are rising. Everything they view is worse than what they looked at before Christmas but costs more. They keep looking and prices keep rising. They decide to wait for prices to fall which then starts to happen in the Summer. Now there is nothing to choose from and what is available, even at lower prices is still more expensive than what they saw before Christmas. They wait until Autumn but prices then start to rise again and although they may make offers, they base these on the Summer market and they are outbid by other buyers. Before they know it they have been looking for a year and spent thousands more pounds in rent. A £200,000 property now costs £220,000. All told the year has easily cost them over £30,000 in rent and lost capital gain. Defiantly some change areas and start the whole cycle all over..."

"... about £240,000. She made her offer and was at lengths to insist that her evidence was passed onto the vendor. The offer was rejected and three weeks later the flat went to sealed bids with two completely different buyers and exchanged a month after that for £302,000. Tanya's evidence..."

"... house ideal for a well-to-do family had come onto the market in Kensington. Prices were generally stagnant and the press was full of stories about an imminent crash but this did not stop three parties all offering on the property at the asking price of £1.1 million. The vendor decided to ask for sealed bids. Each of the three parties would put forward their best offer and the highest bid would get the..."

"... In the event the highest bid was £2.1 million, nearly twice the asking price. When the buyer was asked why he had made such an offer he replied, "I want this house as a place to bring up my family over the next twenty years. By then I expect it will be worth about £2.1 million". He..."

"... market continued to rise month after month and just over a year later it began to look good value. Three parties viewed the property and all three wanted to offer. They were immediately suspicious when they were each told they were not the only people interested and assumed it was just the agent trying to get them to bid..."

"... previous viewings. You can afford what you thought but you have nothing to prove it. You loose the property to someone else who bids at the same time but can prove their finances. You can afford what you thought but have only had one quote which you got because someone..."

"...Finally and crucially check early with each lender or financial adviser what documentation they will require and organise it now. Discovering you have lost your passport and need to order six months worth of bank statements is going to be of no interest to a vendor when you are in a contract race or competing in sealed bids. ..."

"... the Lease: You may not be particularly happy about giving the property back to the freeholder after seventy years. The good news is that whether he wants it or not, if you have used the property as your main residency for the last year, you can force an extension on the lease. There will be a fee and this is usually calculated at what the property is worth now compared to how much it will be worth after the extension is granted. As such a twenty year extension on a property with a one hundred year lease is considerably cheaper than it would be on a property with a fifty year lease. As an example increasing a lease length from one hundred years to one hundred and twenty years may increase the value of the property by £2,000. In other words an amount too small to be recognisable . A reasonable fee for the freeholder to charge you would be £2,000 plus legal and administrative costs. For a fifty year lease the extension may increase the value of the property by £50,000. and so that would be the fee (again plus legal and administrative costs). If your freeholder wants an unreasonably large some it is possible to demand arbitration. A "reasonable" amount will be decided and both parties must abide by..."

"... to offer and when; How the time of year will affect your offer; When to offer below, at or above the asking price; How to handle bidding wars and sealed bids; Why defining your offer can save you money; What should be in your offer apart from the price; How to make a low offer seem..."

"...No one ever starts by making an offer above the asking price but very often there may be more than one offer at the asking price. In this instance a good agent will take the matter to sealed bids whereas a bad agent will start a bidding war. If it sounds like you are heading for a bidding war try and persuade the agent or the vendor to use sealed bids. ..."

"... start a bidding war. If it sounds like you are heading for a bidding war try and persuade the agent or the vendor to use sealed bids. - bidding Wars - The problem with bidding wars is that they work a little like auctions. Buyers get emotional and bid up without properly considering the..."

"... - The problem with bidding wars is that they work a little like auctions. Buyers get emotional and bid up without properly considering the financial impact of what they are doing. It becomes them versus the other buyer and when the dust settles they all too often regret how high they went. ..."

"... versus the other buyer and when the dust settles they all too often regret how high they went. In most cases bidding wars lead to an agreed price that then falls through in the cool light of day. - Sealed bids - In this scenario the agent tells all offering parties to come back by a..."

"... often regret how high they went. In most cases bidding wars lead to an agreed price that then falls through in the cool light of day. - Sealed bids - In this scenario the agent tells all offering parties to come back by a certain time, say close of business the next day, and put forward..."

"... aware that it is not always the highest bid that gets the property. One party may offer £302,000 but they themselves might be in a chain. If another party offered £298,000 and was chain free the vendor may go for what they see as the 'safer' option even though they will loose a potential..."

"... may go for what they see as the 'safer' option even though they will loose a potential £4,000. If you are making a sealed bid choose your figure and then move slightly up to something unusual. In other words never offer £300,000. Instead offer £301,576. Many properties have been lost or..."

"... offer £300,000. Instead offer £301,576. Many properties have been lost or won for the sake of figures as low as £50. True Story - Sealed bids at Elmhurst Mansions A two bedroom mansion block flat had been on the market for five months. The vendor had verbally accepted an offer £5,000..."

"...A two bedroom mansion block flat had been on the market for five months. The vendor had verbally accepted an offer £5,000 below the asking price of £137,500. Another party then offered to pay the asking price. The original buyer was offered the chance to match this which they did and so the vendor, faced with two very similar offers decided to go to sealed bids. ..."

"... original buyers had already, to some extent, damaged their standing in the vendors eyes by suddenly coming up with an extra £5,000 but they then compounded this by saying their sealed bid would be £137,500, the same as the asking price and their current offer. The other party offered £341,700 and their offer was accepted. The original buyers then came back and said they would be prepared to offer £343,000. It was too..."

"... they were putting even more money on the table the vendor could not feel certain that they were stable because they could not make up their mind and only seemed to bid more when forced by another party, not because they truly felt the property was worth that to them. The vendor suspected they may try to renegotiate later and refused their..."

"... best way to pitch your offer is to carefully consider how much you are prepared to pay. Say the property is £260,000 and you are prepared to pay £250,000. As long as you are not in competition with any other buyer make an opening bid approximately 5% below what you are prepared to pay. In this case offer £240,000 and wait for the response...."