House Selling

[andyb]

I am currently looking at estate agents ("Realtors" the other side of the pond) to figure out who I want to use to sell my house.

With the first estate agent I have suddenly bumped into an unexpected issue, there are more than one way to sell a house. The new way (around here) is not the "traditional" way.... let me explain, and please do add your experiences where appropriate.

The traditional way (as I understand it, I am a novice this is the first house that I will have sold), is that you (the seller) chooses an estate agent and you pay a fee, typically either a fixed amount or a percentage of the sale value of the property.

The new way (around here, I understand its popular in Scotland) and its called "Sealed Tender's" or "Sealed Bids", some detailed info here (found by a Google search).

http://www.in-deed.net/conveyancing/con ... m-property

The short version is that you let a load of people look at the property, they then have a few weeks to chose whether or not to sign a document listing a "bid" that they would like to make on the property. The "sealed" part of this and why its often referred to as a "tender" is because all of the bids/tenders are all opened at the same time and the one who bids the most "wins" the property.

There are a couple of caveats, if no-one makes a bid/tender that I regard as high-enough, it can be put out to another tender (at no extra cost to me), I can also chose to sell the property to anyone who has made a bid/tender and not just the person who is offering the largest sum.

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Now I have that out of the way, there are a number of positives and negatives with this option vs the "traditional" method.

Positives:

Its dirt cheap for me to sell the house, excluding solicitors fees the entire costs are £310 (or £210 will confirm later) which is very, very cheap.

The buyers pay most of the fees (2% of the property value) so are already committed buyers.


Negatives:

There wont be a "price war" to push up the sale price because that just not how this system works.

The buyers will already be paying 2% on top of the value of the property so this may decrease their bids vs if it was the traditional method.

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I am going to visit a few more estate agents and get them to give me valuations and look at their costs but I would like any input anyone has to offer, especially if someone has used both of these methods to buy/sell a property.

A couple more notes. Houses around here are selling at full asking price or above within a couple of weeks, there is no-onward chain or need for a rapid sale so what I want is to make the most amount of money from the property after the selling costs have been removed - solicitors fees will be separate, also obviously a smooth transition would be appreciated and =whether I trust the people/company that I will be dealing with, advertising etc will of course be taken in measured consideration.


Andy

[Nicias]

Mathematically, they are both auctions. Mathematically the sealed bid option is superior, my best strategy (as a buyer) for that auction is to bid the actual max I would want to pay. For the traditional method my best strategy is to bid one dollar (or pound) more than my challenger.

So if your possible buyers were rational the first method would net you a higher price. It shouldn't matter who pays the fees as long as the total fees are less.

However, people aren't rational. They get attached to the idea of buying a house, and the traditional method might get them to bid higher then their "honest" bid.

[andyb]

So if your possible buyers were rational the first method would net you a higher price. It shouldn't matter who pays the fees as long as the total fees are less.

I think you missed the point of that, "the buyer" pays the fees rather than the seller, meaning that they have already paid a fee to buy the property, from their perspective whatever they pay the fee is added on top so they are trying to (a) bid enough to buy the property but not too much as the more they spend the more the fee will be, which is a role reversal of what the "traditional" estate agent fees are.

And as a subsequent point, does rationality come into this a great deal.? Yes buying a house is the most expensive thing that most people will ever do, and how do people perceive money vs WANT, need is always a greater thing than want, but want is a much stronger emotion, and emotion + the pressure of buying a house... THE house can easily be THE deciding factor. We could go into psychology a great deal, but I don't want to, I just want peoples experiences and their input.

My main question here is as such.

If the house is valued at £285,000 and its offered to someone who will have to spend 2% (£5,700) "buying" the property will their "bidding" price include the amount that they are spending.? i.e. will they reduce the value of the house BY £5,700 or will they pay full value.? e.g. giving me ore money, which my greedy heart desires...

The opposite needs to be considered (traditional), by this method the house seller pays MOST of the cost of selling, and they buyer pays little, but will that translate into the buyer paying more as they are not out of pocket to start with.? And also that by the traditional method "bidding wars" are up and running and can only be a good thing for the seller (me) wheras they are pretty impossible by the new "bidding/tender" method.... which will earn me more depends on the future details, as yet to be obtained.


Andy

[rotor]

I'm just going through the process of buying my first UK house (in London, no less), and I had to submit a "best and final offer" (the same as a sealed bid). Let me tell you that from the buyer's point of view, it's horrible, because you don't know:

- How many other bidders there are (if any -- or is the agent scamming you)
- How much you think the other bidders want the property. In the case of London, there is just not enough supply, and so each new property has huge interest, which leads to over-inflated prices. People (like me) are so desperate to get into a house of their own, that they are willing to pay these inflated prices, and that in turn just drives everything up. So you are bidding against invisible others, knowing that at least some of them are as desperate as you are.

So it essentially forces you to bid the maximum you are prepared to pay, which may be a lot more than you would have under a normal bidding process, mainly depending on how desperate you are, and how well off you are.

In your case, are each of the bidders paying that 2% fee? Or just the successful one? In either case, as a buyer I would immediately walk away from such an arrangement. Do you have a link to the agent's site where they explain this process? I already have to pay stamp duty, solicitor's fees, mortgage fees, etc., why should I pay yet another fee, unless everyone is following this new system?

[edh]

Don't get scared into paying over the odds. If they say no when you offer what you genuinely think the house is worth, walk away. There are other houses out there and you don't have to buy. There is nothing wrong with renting if there is no business case for buying.

The London market is very expensive and right now its going up partly because of excessive interest in buying houses just from the fact that the prices are going up. Madly including people who don't even live in the UK but see that London's house prices are expensive so decide that they'd like to buy into the market...