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Don’t seal your bids… open them

If you’re selling your property and looking for ways to get the best price possible, you may be considering taking the sale to sealed bids. An increasingly popular way to sell on the open market, sealed bids offer a way to encourage higher offers from interested buyers – but does it really get the most for your property? 

In this blog, we’ll be discussing everything you need to know about estate agents’ sealed bids, including what they are, the pros and cons of sealed bids, and whether or not there’s any better way to sell your property for a high price. As experts in the property industry, we’ve seen it all, and are ready to share our insights to help confused sellers separate the hype from the truth.

What is a sealed bid?

In the context of property, a sealed bid auction (also known as ‘best and final bids’) occurs when there is more than one interested buyer in a property. Each buyer is invited to submit a sealed bid to the estate agent handling the sale by a pre-specified deadline. Without knowing what any of the competing bidders have offered, buyers are encouraged to offer the maximum budget they would be willing to pay for the property, and the sale typically goes to the highest bidder.

Why do people do sealed bids?

In the competitive market of house buying, which continues to gain momentum in 2024 with a year on year increase of 16% in agreed sales in the first 6 weeks of the year, many buyers are willing to invest that little bit more to get the property of their dreams. Sealed bids are a tactic that many estate agents use to push buyers towards this, with fear of missing out by a slim margin causing them to offer an extra £1000 or £2000 above their original offer to secure it. Because of this, the common belief is that a sealed bid auction is the best way to get more for your property. However, while it’s true that this can get you a higher price, there’s no guarantee that you’re getting the most – and risks of revised and revoked offers still stand.

Is a sealed bid legally binding?

No, sealed bids facilitated by an estate agent are not legally binding, for either party. This means that should a buyer have second thoughts or lower their offer following a survey, or a seller accepts a higher offer from a late coming party, the sale could fall apart. This is one of the biggest problems that buyers and sellers face when facing the ultimatum-style transaction of a sealed bids auction – it’s never guaranteed. 

What are the pros and cons of sealed bidding?

Going to sealed bids is a mixed bag, with a higher buying price likely for the seller, but no security in the sale completing if anything goes wrong for either party. So, if you’re selling and considering if sealing bids will be the right route, make sure you carefully consider the pros and cons first. Below, we’ve laid these out from the perspective of the seller to help you do just that.

What are the advantages of sealed bidding?

  • No obligation: If you’re not happy with the offers made, you have the freedom to reject any and all bids. This does, however, mean that the property will remain on the market and a sale will take longer to complete as more viewings from new interested buyers are held. 
  • Higher bids: The process encourages buyers to offer the highest amount they’re comfortable with to secure the winning bid. This helps sellers to get a better price than they may otherwise have gotten, as the pressure and uncertainty bidders face can spur them on to offer more. With this, however, there remains a risk of overpayment from buyers who offer more than they can pay, which could cause the sale to fall through should their mortgage lender refuse the loan.
  • Faster process: Typically, going to sealed bids is a faster process than drawn-out negotiations which can go back and forth for days, or even weeks depending on the speed of deliberations. Setting a deadline for bids to be submitted cuts this timeline down significantly and, as long as the sale completes without issue, the process is quite fast.

What are the disadvantages of sealed bids?

  • No guarantees: While the psychology of asking for ‘best and final bids’ can encourage higher offers from bidders, there’s no guarantee that you’re really getting the best possible price for your property. This is because, without the transparency of open, competitive bidding, buyers may still try to undercut or save with lower offers. It’s only when a buyer knows exactly how much they need to raise the offer to be successful that they’re truly motivated to do so.
  • Residual risk: Even with a top offer accepted, there remains a risk that the sale will collapse at the last moment, leaving the seller stuck in a tricky situation. They will have to decide whether or not to renegotiate the price with that buyer, contact past bidders who offered less (who could then lower their offer further), or remarket their property and open it up to viewings again. The only way to secure a sale at the bidding stage is by instead opening the bids up, and taking your property to the auction room.

Benefits of opening your bids

Selling a property by auction gives you access to the advantages of a sealed bid auction, while limiting the risks. This means that you can benefit from competitive, fast bidding, while knowing that offers made are legally binding. Depending on the selling option chosen (either conditional or unconditional), sales can also be completed within as little as 30 days, so delays with surveys, additional negotiations and slow-moving contracts are erased.

Overall, if you’re looking for speed, certainty and the best price possible, open bidding in an auction setting is the best option available. 

Don’t seal your bids… open them with SDL Property Auctions

Selling your property in the competitive, secure environment that auctions provide isn’t just the best way to get the highest price, it’s also exceptionally easy to do. When you sell with SDL Property Auctions, we take care of everything, from creating and advertising your listing to encouraging bidding among buyers. 

To get the process started, request a free, no obligation sales valuation today and our friendly auctioneers will help you work out how much you could get for your property when selling by auction.