How To Win ‘Sealed Bids’
Now, more than ever, I’m being asked to compete in a sealed bids negotiation as directed by selling agents across the country. This is a popular way to sell homes fast when there are many buyers involved and to avoid agents dragging out a 4 week auction campaign.
They can be hugely overwhelming for buyers as they lack transparency, are typically done with urgency (often within 48hrs) and normally handled by agents with poor levels of communication which add’s the the stress levels of already emotional buyers.
So, why do agents sell via this method?
- Makes buyers put their absolute best offer in writing with no second chance
- Creates urgency and fear of loss as buyers know they are competing with others for ownership
- Removes price from the equation, so the market will determine value
- Fast tracks their sale result
- They believe it to be transparent because they don’t influence the result in terms of a negotiation with any buyer
These are my tips to prepare you for a “sealed bids” offer and how to best give yourself a chance to win.
- Be better researched, study the market closely, know the prices being paid in real time
- Call leading local agents for their opinion on value, often they’ve seen the home or know the vendors motivation for selling
- Complete the due diligence with speed. Know what you need to achieve and execute on it fast (Building and pest reports, strata report and so on)
- Know the rules of engagement to make the offer, be clear on the time deadline, the way the offers needs to be made (email or on contract)
- Ask the agent “What is the ideal seller terms of sale?”. You want to make your offer match their desired settlement date, deposit size, inclusions / exclusions
- End on an odd number, most buyers offer in $5k blocks, so instead of $900,000, offer 900,100 or 901,000
Most buyers I deal with are still unsure at this point what to offer, they 2nd guess themselves – overloaded by data when researching recent sales. The best way to determine where your final price should sit is to do this simple exercise;
Let’s say your research suggests an offer around $900,000. Ask yourself this tough question, rising in circa 1% increments and don’t stop until you have your answer.
Would I be disappointed if this sold for $910,000? If the answer is yes…
Would I be disappointed if it sold for $920,000? If the answer is still yes go again and keep going until you find that number.
When I do this with my clients, it’s often really uncomfortable for them, they hate being held accountable to make a decision. If you don’t do this, you set yourself up for disappointment when the sealed bids winner is announced. This way, you are comfortable spending to a certain level, beyond that, you’re happy to walk away.
Once you have mastered this (and it works the same when setting your walkaway auction bidding price too), it’s so much easier to bid with confidence and feel in control, my clients never call me back should they lose a sealed bids with any signs of regret – they paid their max and beyond that it wasn’t meant to be. Buyers that don’t do this have “buyers remorse”. Don’t be that buyer.
Sealed Bids – It’s not an ideal way to buy a home, but you’ll likely come up against it at some point, so take this guide and go forward with confidence.