Skip to content

Game of Homes: Overcoming high pressure tactics

As the London property market continues to surge, some of the high pressure tactics deployed in the previous boom are back with a vengeance. Legal eagle Edward Allan explains how to stay ahead of the games…

Open Days

Mass viewings of ten induce panic among potential buyers. The most popular properties across London have all viewings strictly limited to a single two hour Saturday morning slot. Competition is intensified and buyers are then often expected to submit their "initial" offer by Monday morning, with best and final offers being requested a few days later.

I've heard of one prospective buyer being shown around a two-bedroom house in south-west London, ripe for re-development, with 30 other interested parties in the space of just 20 minutes.

Sealing The Best Bid

Agents will collate the prospective buyers' best and final offers for the seller to then consider. It is a misnomer to believe that it is purely a matter of offering the highest bid.

If you are asked to make a sealed bid, find out from the agent precisely what is required by the seller. If the seller has agreed their onward purchase it is likely that they will be looking for a buyer who can act most quickly and offer the highest price. At this stage, it is worth spending time producing a suitable covering letter to accompany your best and final bid to help sway the seller to favour you. It is important to let the seller know why this property is the right one for you and we have seen clients win best bids without having submitted the highest offer because the seller thought they were the right family for the property who could also perform quickly in securing a very quick exchange of contracts.

In a sellers' market it is the best tactic available to buyers

The other pieces of advice for anyone writing a sealed bids letter is to stress that you are (if you can be) flexible on timing for completion. Many sellers want a quick exchange, but may want time between exchange and completion for school terms to end or work commitments to be completed. The agent will of ten show copies of this letter to the seller to help them decide, so it is worth putting yourself in the shoes of the seller and trying to demonstrate that you are the bidder who wants this specific property and will do everything reasonably possible to make their life easier in selling their property. In a sellers' market it is the best tactic available to buyers.

Whilst all reputable agents will adhere to the timings given as to when the bids are to be opened, so that you have no doubt that your sealed bid remains so until the allotted time you should consider delivering the bid to the agents just before the allotted time.

Selling agents act in the seller's interest and, beyond the price, it is important to demonstrate to the agent that you are a committed buyer and approach the process in a professional way.

If you do require a mortgage to purchase the property you should make sure that you have an offer in principle for the sum that you require. You can then advise the seller in your sealed bid that your mortgage arrangements are in place and that you have an offer in principle.

You should have a surveyor ready to carry out a survey of the property, have instructed a solicitor and, where necessary, provide direct contact details of your mortgage adviser, solicitor and surveyor. If you look committed to the purchase and are clearly ready to proceed as soon as you are confirmed as the winner of the sealed bids, then in a highly competitive market this may assist you in being seen as a better candidate than others, even if yours was not the highest bid.

Gazumping

Fierce competition once confined only to prime central London locations has now spread throughout the city. One client was told after exchange by the selling agent that three other prospective buyers had tried to outbid them, but fortunately for our client the seller had been gazumped themselves and was a strong believer in the doctrine of karma!

There is little that can be done to stop gazumping and though agents will often push exclusivity agreements with large non-refundable deposits as a way of a buyer securing a property, these may not necessarily achieve what a buyer had wanted. Such agreements do not bind the parties to actually exchange contracts and at the end of the exclusivity period the seller can still walk away, but should have to return the deposit.

It is often hard to prove that anyone else may have come forward to buy the house during the exclusivity period

It is often hard to prove that anyone else may have come forward to buy the house during the exclusivity period and the cost of litigation prohibits most people making a claim. It can also take some time to settle such agreements because any solicitor acting for a buyer will want the deposit refunded in certain circumstances, not least if there is an issue with the legal title or the survey throws up a structural problem with the property.

The Right Team

At the top end of the market, assembling an experienced professional team further gives you an advantage when looking to purchase property, particularly in the prime central London market.

We have exchanged contracts in less than seven hours from being instructed

Carefully chosen solicitors can, despite the pressure of the deal, negotiate effective exclusivity agreements on behalf of clients and ensure all due diligence is carried out quickly to secure a prompt exchange. Sellers of ten expect a five or 10 day exchange period, but we have exchanged contracts in less than seven hours from being instructed. Solicitors regularly dealing with prime residential property will be able to provide tailored advice regarding the ancillary issues that may arise when relocating or investing in high value property, often in relation to a client's tax position that may require a complex ownership arrangement or offshore structures.

A buying agent can also be an invaluable tool in keeping the deal together by using their relationships with the selling agent to reassure them and ward off threats from other buyers.

Most importantly, buyers should keep in regular contact with the selling agent and by ensuring a good dialogue opens up, buyers will be best placed to keep pace with the fast changing market.

This article by Edward Allan, property associate was first published in Prime Resi, Journal of Prime Property in December 2013.

To view more recent articles, click here or visit our Twitter page

How to find us:
London Bankside

Bankside Office

240 Blackfriars Road
London
SE1 8NW
DX 53 Chancery Lane

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

London Mayfair

Mayfair Office

6 Grosvenor Street
London
W1K 4PZ

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

Oxford

Oxford Office

6 Worcester Street
Oxford
OX1 2BX

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

Bankside Office

240 Blackfriars Road
London
SE1 8NW
DX 53 Chancery Lane

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

Get directions

Contact us