The "right of award" is an important term in the Dutch real estate market that can often be confusing to prospective buyers. Simply put, it means that a seller of a property has the freedom to select a buyer even when higher bids have been submitted. This can be frustrating for candidates who think that the highest bid automatically leads to the purchase of the property, but it is important to understand what the "right of award" means before you make an offer, in this blog we are happy to explain it for you!
What is the right of award?
In (real estate) auctions, it is usually the case that the highest bidder "wins" the property and thus becomes the buyer. In an exciting race, people bid against each other until only one person remains. In the housing market, this is usually a little different.
The "right of award" is a term often found in purchase agreements or listing texts on funda. Simply put, it means that the seller of a home has the freedom to decide to whom they want to sell the home, even if higher bids have been submitted. This may mean that a buyer who made the highest bid will not necessarily become the buyer.
Why is the right of award used?
There may be several reasons why a seller wants to use the "right of award. Sometimes sellers simply want the ability to choose who they want to do business with. This may be the case, for example, if the seller already knows the prospective buyer (family or friends), but also because they do not want to award the home to certain target groups. A popular example of this is a 96-year-old seller who decided not to award her home to investors in order to provide more opportunities for first-time buyers.
In contrast to the previous example, it can also happen that a seller does award to a professional party such as an investor. This may be because they have better conditions and can usually act more quickly than a private buyer. In addition, there is no reflection period for these parties, so that (despite a higher offer from a private individual) it may be interesting to consider.
What became increasingly common over the past two years was award based on motivation. A candidate then provides a piece of text for the sellers and broker to motivate their bid. In this motivation letter, personal notes can be added about the household, but also, for example, an explanation of the caveats used in the bid. In some cases, this bill became so popular that companies were even created that could deliver it automatically on a large scale.
The right of award in the bid log
The mandatory Bid Log nowadays shows all bids on a property. It is precisely in this overview that it is important to keep the right of award in mind. Regularly Eerlijk Bieden questions from concerned candidates who suspect wrongdoing because they had made the highest bid, but were ultimately not assigned as buyers.
Therefore, the bid log also reflects the additional conditions from the bid. For example, information about reservations and preferences in the delivery. The only thing that is not shown is the motivation of candidates, because of the privacy of candidates we chose not to show them in the overview.
Sellers always receive the same information from Eerlijk Bieden as the real estate agent. Should you nevertheless have questions about a seller's choice, you could possibly ask the selling broker for substantiation. Note : the seller is not obliged to substantiate the choice.
