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.
“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.