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Best And Final Offers “do massive disservice to sellers” - claim

Best and Final Offers should be scrapped - and a property expert claims that would be good because they do a massive disservice to vendors. 

Jeremy Prior, managing director of Auction House, says these offers, also known as sealed bids, rarely achieve the best price for sellers.

“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” he contends.

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“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.”

Prior claims that auctions are gaining popularity and following the route of other nations where homes under the hammer are more commonplace.

“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. Before that happens, it seems clear that canny vendors will wish for their properties to be sold by auction instead of best-and-finals. My sincere hope is that this will sound the death knell for sealed bids, and they become a thing of the past” he continues.

Auction House is in a verbal fistfight with Iamsold, with each claiming to be the largest auctioneer service handling residential property.

Auction House says it’s enjoyed its highest September total ever - £85,586,151 - as well as recording its best year for the total raised during the first three quarters, at £449,733,079. 

Prior continues: “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 from £126,558 over the past five years to £170,353 now.”

He suggests this reflects the fact that auctions are appealing to a bigger section of the public – not only those who want to invest, but also those who want to buy properties to live in.

  • C B
    • C B
    • 08 October 2021 06:48 AM

    Totally disagree. In an auction the buyer only has to go one incremental bid higher than second place.

  • Sam Hunter

    While I still have a huge bias towards Auction (It's tattoo'd into my brain) I have to fundamentally disagree with this opinion.

    When communicated and managed correctly a best and final offer process is a successful way of achieving a seller the highest price the market (at that time) is willing to pay and making sure the buyers don't feel jaded or left out.

    I stress communicated and managed correctly because there are still agents who, unfortunately, just say to their would-be purchasers "it's best and finals, get your offer to me by 5pm today". More work can be done to improve the B&F process (and perhaps standardise it) but to claim it's a "massive disservice to sellers" is, in my world at least, incorrect.

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    • N W
    • 08 October 2021 08:25 AM

    What a load of tosh!

    As an agent of over 37 years experience and one who has auctioned property personally, the claim that Informal Tender (sealed bids) does the industry and sellers a dis service is dare I say it "laughable"

    The advantage with an auction is security of sale but apart from that, it rarely (in todays market almost never) secures the highest paid price possible out of the market.

    The weakness with an Auction is that the highest bidder only has to pay slightly more than the highest budget of the next lowest bidder (As a result the top bidder never really has to pay the maximum price that they might have paid if pushed all the way to the maximum of their budget).

    Having sold many many properties by sealed bids over the years, even more so over the past 18 months, the prices presently being achieved by sealed bids can be £20/£50/£100/£150/£200 and dare I say it even almost £400K above the next highest bidder (figures that would never have been achieved in an open Auction environment as the top bidder could never have been pushed to this level once the reserve had been passed as no 2nd under bidder would have had the ability to chase the figures this high.

    Yes I have had a sealed bid process where all three offers were the same and yes I have had two where the buyer then changed their mind (but a very small percentage in comparison to the numbers of properties successfully sold this way) and we went straight back to the next bidder who was still looking and happy days.

    My only regret is that I hadn't on all of these sales built in a performance fee for securing such high sales prices over and above the guide prices (we do now but I missed a trick on that for many months)

    With due respect to Auction House and others (who I know and have a lot of respect for), the claim that sealed bids does the market and sellers a dis service is absolute balderdash (if I had sold most of these homes by Auction i would have actually not done my job properly and then done a dis service to the sellers)

  • Vilesh Rew

    Utter nonsense (from someone simply trying to encourage people to use his own business type).

  • John Evans

    Best and finals only work if the seller puts in writing no more offers. If my best and final is refused I can re offer the next day and legally this has to be put forward. Most buyers would not use an auction - auctions are for properties hard to sell. Private treaty will always get more money.

  • icon

    If best and finals are used on a very popular property a good result can be achieved. i would always recommend having the title, searches and property information forms completed and avaliable to potential buyers so the successful offer has 2 weeks to exchange. As we all know you only get certainty with an exchange. Free PIP Vaults can be used for this.

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