Published: 23/03/2022 By Oliver ChappleIt's the spring market and properties are being valued and viewed left right and centre, off-book instructions are flourishing like daffodils and are being tested for some time by agents before being sent to the Portals. With the buzz of viewings still very much here, and many more properties coming to market at lower prices than at the beginning of the year, or at the back end of last year, the competition is heating up for everyone. Some agents are pushing applicants into sealed bids, but is this actually a good idea?
The answer is like always, I guess, it just depends - if all your applicants after a property and are all in a similar buying position, for this example let's say for argument that they are all cash buyers, then there is only the best offer price that matters right?! So here's why you should not be pushing your applicants to sealed bids when your applicants have all offered asking price. In a sealed bid process many buyers are not going to necessarily persuade themselves that they should put more money on the table for a variety of standard reasons. Buyers don't always think what additional money, had they offered it, would they have kicked themselves afterwards for not increasing the offer by in order to WIN. The sealed bid process puts a ton of stress on all of the buyers, many of whom if they know that they need to go up to beat the last bid offer, would actually do so and could have in hindsight if they had upped their price at a sealed bid. The other side of this is, and this is one you should very much consider, the buyers that lose in sealed bid, how likely are they to going to want to come back to the table for potentially another round of punishment? If your agency subsequently finds them another property after that bad experience, how positive are they going to feel about the property they see and then perhaps want to buy? The whole sordid experience will leave a nasty taste in their mouth and this can be completely avoided.
The machine of industry guidance of course kicks in, but nonetheless, agents can still consider how one could better operate a private bidding auction when there is no deposit to put down, and there is certainly some thinking in the sealed bidding process that needs challenging and perhaps overhauling, for many a property sales situation. In these situations where the buyer's situation does not make that big a difference to the bid, why not instead of going to sealed blind bids, instead consider getting the parties together to agree to an open bidding session? The agent would madate that is all confidential and there will be no disclosure of a bid amount to any other bidding party. The plus side is as a buyer you know that you have been outbid, just like Ebay or a real auction and basically how the world today operates auctions, and there's anothe bite of the cherry if you haven't maxed out your budget which you may not do or feel you shouldn't in a sealed bid process. So there's likely to be more money on the table right?!
Think about the last time you were at a charity do, where there was a classic hands-up auction for some crazy donation. You didn't get asked to write down your best bid, no that would be incredibly boring and of course not get the best m
money for the prize on the night!!, No! You succumb to the building bidding pressure in the room, and the prize always gets the best price, especially after a few tipples for dutch courage. It's the same with property, people know their maximums and sometimes they just need a bit of push with the knowledge they have to in order to win. The agent would have qualified their source and quantified funds beforehand so what#s the problem? In my view it's blind thinking that a sealed bid process is the way to go, certainly when the buyers are roughly in the same position and have tipped their hat at the Vendors's asking price. I believe you want to create a buying tension which is for a buyer to go as high as possible and not settle at a single figure on one specific day, because that's what you do at sealed bids and it just leaves no wiggle room for anyone, excuse the pun!
If you run a sealed bid process then you are literally leaving money on the table, so in my opinion, you have to really decide whether you need to. Now let's consider what could happen if the buyers are indifferent buying positions where a sealed bid seems more appropriate on the face of it. Well I say you still end up with all the same problems as buyers in same buying positions with cash to spend - disenfranchised hot buyers, who lost out but don't know why, and felt they had no control of the process or their offer. If every bid is effectively an offer, why can't you have an open bidding process, perhaps held at a specific time and date, with the aim to reach the max anyone of the parties can say they spend in the full knowledge they have put their true, non-blindfolded foot forwards. The vendor can still consider all of the final bids from each party and also consider their buying positions, so why not?
You may say well that drags it on for the vendor, well I say unless there's a deadline, which normally there isn't then i still see no reason why it matters if it drags on if it achieves a higher price, plus the fact, if you want to stop it dragging on you can get all the bidding parties together for an open bidding session and it doesn't require an auctioneer! It could be done by Zoom without any complicated conference calling, it could be done with cameras off. There are plenty of ways to make this process better - where there's a will there's a way!
If I am buyer X who knows that I have to outbid buyer Y, I don't need to know what Buyer Y offered, I just need to know I have to beat them to win. If I reach my limit I'm out, like at the charity do. Speaking from bitter personal experience, I have recently lost a couple of sealed bids because I bid the amount I thought the property was worth and that felt about right, but actually, having done the wash up on my blind bid, I would have easily succumbed to pressure and have gone higher with my offers, if I had been given the chance to consider the fact I that needed to increase my offer to win - whilst considering my ceiling plus a bit more like at any public property auction! At least I would have been in control and lost fair and square, or not, as my buying position could then have been taken into account with my absolute maximum which would have been made in the knowledge that someone else was willing to pay more, and that was on the table and transparent.
Food for thought for all you estate agents, but with properties now coming on in droves, at least this is what we can see accross is happening accross our circa 250 estate agencies, and those with our CRM software many of which are still in test market phases, it would be great to see some changes to the way offers are handled to give buyers greater transparency. I should know as I am one! If your buyers could see their offers, and also directly see them specifically rejected by Vendors, even without a reason, TRUST levels would increase by natural transparency, you would also have more traffic on your Website increasing your SEO and a chance for buyers to see what else you have and that's not on the Portals like Rightmove, giving your estate agents Website more power and return on our investment.
I personally don't want to see the agent telling me that the vendor has rejected my offer. I want to actually see the vendor has rejected my offer. What if your estate agent's Website could and would do this? These are all good points of trust differentiation.
Talk to Webdadi today to see how your clients can login to their CRM account via the Website as Webdadi can expose all kinds of data via a Client Account via Webdadi Websites and our integral CRM.