Offers in an envelope, please

How sealed bids can help you win - or lose - your dream house. By Penny Jackson
Click to follow
The Independent Online
For the second time, the house you really wanted - four bedrooms, large garden, just down the road from the school - has been whipped from under your nose. Apart from panic, what do you do? The shortage of good family houses, particularly in London, has brought a growing number of people to this point. The chances are they will have been involved in a process of "best and final offers" or "sealed bids".

If you are Jonathan Hewlett, you swallow your disappointment, move in with your in-laws and, with nothing to sell, trust you will be in pole position when the perfect house comes along. At least Mr Hewlett does not have to rush back to his property consultant for advice - he is one. As a director of Savills he finds the scenario familiar, though not, until now, at a personal level. "There were three or four people after the house and so I suggested we went for sealed bids because it seemed the fairest way. We lost. My wife was very disappointed. But, with hindsight, I was not absolutely committed to it. In fact it is not uncommon for people to bid for a house that they know other people want, and then, when they win, decide that it is not for them."

At the time the Hewletts joined the bidding their own house was not yet under offer, so they were not in a strong position. "If I had been advising a client, I would have said that it was too early to commit to a price and timing. And it is worth remembering that the vendor does not have to take the highest offer, but the best, taking into account all the circumstances. We exchanged contracts with our buyer this month, anyway, because I did not want to get caught in a long chain. Now we can be totally flexible."

Mr Hewlett offers the following tips to buyers caught up in competition. Keep the agent informed, and make sure your solicitor can move swiftly. Your finances must be in place; decide on your maximum bid and give it your best shot. He suggests turning the figure into an odd number; it may just have the edge. And don't worry about what the other bidders will do: it's a waste of time.

Sara Graybow, a director in Hamptons' Clapham office, knows how bitter the loss can be when a small figure is in question. "I had clients who lost a house for pounds 100. They put in pounds 427,500 and it went for pounds 427,600." But there can be bitterness in victory as well. "I also had a client who won a house this way but then discovered he had paid pounds 50,000 more than his neighbour, who had also just moved in. That is why it is so important for people to decide how much the house is worth to them. Sealed bids are awful for the buyers, so they must be sure they are doing the right thing."

Paul Tayler, from Hamptons' Knightsbridge office, recommends that buyers get a survey done before the bids go in. "It is also a good idea to get your solicitor to deliver the bid."

But what to do if the best houses never even get on to the market? In the present climate, agents will ring round a hot list and by the time the particulars are drawn up the house is spoken for. "Keep in touch with your agent. Make sure they know you are not time-wasting. It's no good expecting to hear of something good if your own house is not even on the market."

Philip Blanchard, director of John D Wood's country residential property, hates sealed bids. "It's a cheapskate way of doing your job. I'm paid to get the best price for my client, not wait for envelopes to be opened." He advises vendors to go for private auction. "I have just sold a house for pounds 500,000 more than the asking price. We did it over three days. Everyone knew the sums involved, so it was completely fair, and no one can say it wasn't worth what was paid for it."