Buying Property from Knight Frank via Sealed Bid

[barry_j]

Has anyone got experience of sealed bid auctions and can offer any advise. I've never done this before and I'm concerned about paying over the odds (as you would!). The problem is there are no comparable properties.

Does anyone have any mates at Knight Frank that can offer advise particular to the way that they do things?

>> Edited by barry_j on Friday 26th May 19:36

[jamesuk28]

I have bought through sealed bids (best and final offer) before and hate it. It works well for the vendor but not for the buyer. You either end up getting "pipped at the post" or paying too much.

Certain agents have been known to "influence" the process, Knight Frank however are honest agents and basically you will have to put in your best offer and hope for the best, sorry.

The vendor does not have to accept any offer, and ability to proceed is taken into account along with the offer amount. So a lower offer may be accepted if you can exchange and complete fast

>> Edited by jamesuk28 on Friday 26th May 21:55

[aceparts_com]

I remember Kirsty and Phil recommending a bid of 800K for a house. They later discovered that the next highest bid was 200K lower! My advice; don't ask kirsty and phil for advice.

[maxed]

Difficult one.
Research the whole area and compare prices on what has been sold over the past 6-9 months.
Decide what you can afford and no more!!

But, first, ensure you really want this property.
Also, the owners will not change their minds on selling as you will have wasted one hell of a lot of time and effort on nothing

[barry_j]

Thanks for the replies - any more thoughts appreciated! The agent sold another property last month by doing a telephone auction but this time they seem to favour the sealed bid. Both properties were different and both were unlike any properties in their respective areas so its difficult to make an accurate estimate of the value.

Any ideas as to which circumstances an agent would use a sealed bid versus a telephone auction?

Also, are there any situations where a sealed bid is better for the buyer than a telephone auction?

[jamesuk28]

If it was a proper telephone auction then the highest bidder would have had to basically pass a deposit and exchange contracts there and then, as per any property auction. Sealed bids do not tie anybody in, both vendor and purchaser can still walk away right up to exchange, assuming the property is not in Scotland.

By telephone auction I feel it may have been an informal auction with only 2 or 3 interested parties. If the property is going to attract a lot of interest then the sealed bid process is favourable.

You could be a bit sneaky, and approach the owners direct. Ask them what they want to withdraw the property immediately. Agents fees would still however be payable by the vendor to Knight Frank.

>> Edited by jamesuk28 on Saturday 27th May 10:03

[barry_j]

jamesuk28 said:

Sealed bids do not tie anybody in, both vendor and purchaser can still walk away right up to exchange

Do you have to put a deposit down if you win the sealed bid auction? If so, surely you would loose that if you walked away?

jamesuk28 said:

By telephone auction I feel it may have been an informal auction with only 2 or 3 interested parties.

You're right it was informal. My concern with the sealed bid is that if I win the auction, the next best bidder might be £50k or so less! Given that, I think I would prefer the telephone auction. Do you agree / disagree?

jamesuk28 said:

If the property is going to attract a lot of interest then the sealed bid process is favourable.

Favourable for the buyer or the seller?

>> Edited by barry_j on Saturday 27th May 16:38

[jamesuk28]

Selling via sealed bid is not an Auction, in the true sense of the word. At a proper property Auction (as per a car auction) when the hammer goes down thats it the property is yours, you usually have to pass a non refundable deposit over and you are legally bound to purchase the property. Thats why you would have already arranged finance and had a survey carried out.

You do not have to pass a deposit over in a sealed bid situation until contracts are drawn up, usually 2 weeks.

The term sealed bid is very mis leading thats why its true name is "best and final offers" unless you are passing a bid onto an auction house for an auctioned property. If you win the "sealed bid" you then have a contract sent out to you as per any property transaction, upto the point you actually exchange contracts you are still free to walk away.

The fact that your bid may be £50k higher than the next bid is tough, thats why as a property developer I hate the sealed bid process.

Sealed bids are good for the vendor, not really for the seller. Thats why a telephone auction may be favourable, but if the vendor has any sense he will go with the sealed bid system.

More info on Auctions can be found at one of our sites www.1st-timebuyers.com

[barry_j]

Thanks - thats really helpful info. If only I had a friend who worked at the estate agents!

Should I make my bid subject to any conditions?

[jamesuk28]

Yes your bid at the very least should be headed "subject to contract" (STC) and if you intend to get a survey carried out AFTER the sealed bid has been accepted head it up "Subject to survey" as well

Bear in mind, if you can prove you have access to finance ie a letter from your bankers, and you have already paid for a survey your bid may be given higher priority even if it is not the highest bid amount.

Some sealed bids have been influenced by "tame" agents, IE tell me what the highest bid is, I will top it by £2000 and there is £2000 in it for you as well", it happens, but Knight Frank are a very reputable agent. I would not suggest such an approach is made, not that you would obviously think about it.

Either bid your highest amount and hope for the best, or contact the sellers direct,(a land registry search will provide their details) and say "look what do you want to sell the property now" it has worked for me before, and is not underhand.

Anymore questions, please just ask.



>> Edited by jamesuk28 on Saturday 27th May 22:04

>> Edited by jamesuk28 on Sunday 28th May 11:32

[singlecoil]

barry_j said:

My concern with the sealed bid is that if I win the auction, the next best bidder might be £50k or so less!

The sellers might not necessarily have accepted the bid that was £50K or so less, so don't worry about it, just bid your best offer.

[POORCARDEALER]

I have tried to purchase properties on a sealed bid basis and have NEVER managed it, I have been pipped by a couple of grand several times (on 500K + properties), depends how much you are prepared to bung the agent IMO.........sealed bids SUCK (unless you are the seller)