The UK’s largest property auctioneer – operating as Loveitts Auction House in Coventry and Warwickshire - says the increased success of auction could help bring about the end of sealed bids, or ‘best-and-final offers’, as they are sometimes known.
Sealed bids usually come into play where there is significant interest in a particular property, and so potential buyers are invited to submit their offer to an estate agent before a pre-agreed deadline, without knowing the size of any other offers being put forward.
Sally Smith, Auctioneer and Director said: “The simple truth is that sealed bids do a massive disservice to the seller by failing to achieve what could be raised in the competitive environment of an auction room.
“Random single offers in envelopes are rarely likely to reach the heights of figures obtained in an open and transparent bidding process, where a talented auctioneer can ensure that the best price for the property can be achieved. Not only that, unless you’re buying in Scotland, sealed bids are not legally binding and either party can pull out of the deal at any time.
“By contrast, when the hammer falls in an auction room, it represents a binding exchange of contract between the two parties. So, if you’re a seller thinking about using the ‘best-and-final offers’ option with an estate agent, our advice is to consider auction instead.”
Sally’s comments come after the release of the latest Auction House figures, which indicate the group raised its highest September total ever (£85,586,151), as well as recording its best year ever for the total raised during Q1-Q3 (£449,733,079) – which itself was more than £120m above its previous best total in 2018.
She explained: “It’s been an astonishing year for us. In fact, we’ve raised more in the first three quarters of this year, than we’ve raised in an entire 12 months in the past. There’s no doubt that for the first time in the group’s 14-year history, we’re going to hit the half a billion pound milestone by the end of the year.
“This is accompanied by a sharp increase in the average price of our sales, which have jumped by more than a third (34%) from £126,558 over the past five years to £170,353 now.
“This reflects the fact that auctions are appealing to a bigger section of the buying public – not only those who want to invest and trade, but also those who want to buy properties to live in. In other words, not just buy-to-let, but also buy-to-live.”
In September Auction House sold 463 properties from 559 offered – an impressive success rate of 82.8% and raised a total of £85,586,151. This means that in the year to date, the group has sold 2640 properties from 3186 offered – with a similar success rate of 82.9%, and raised a total of £449,733,079.
Sally Smith added: “It looks like the English property market is starting to catch up with the Australian one, where the majority of properties are sold by auction. But before that happens, it seems clear that canny vendors will wish for their properties to be sold by auction instead of best-and-final offers. My sincere hope is that this will sound the deal knell for sealed bids, and they become a thing of the past.”