If you are looking for or selling a home you will come across different terms such as: opening proposal, deadline and offers. Can't see the wood for the trees? Don't worry, in this blog we explain in detail the different sales methods for homes.
Sale by tender
Closed tender sales are still widely used as a sales method. During the closed tender, all interested parties are given the opportunity to submit a final (or extreme) proposal once "blind" before a predetermined deadline. In the past, this sales method was often organized by a notary public with closed envelopes or faxes that were opened after the deadline. After the closing time expired, all parties met to jointly open the envelopes and share the results.
Can a broker view bids?
Nowadays, real estate agents also often use this method of sale when there is a lot of interest in a property, but thanks to a leap in technology, it no longer necessarily has to be organized by a notary. As with the notary, an estate agent is not allowed to make any statements about the amount of bids in the meantime in order to avoid unwanted price fixing. The system of Eerlijk Bieden uses the digital vault. This means that the bids are digitally sealed in the system. The broker can then see that bids have been made, but not how many and under what conditions.
What does the seller's "right of award" mean?
After the deadline, all bids are released and the broker enters into discussions with the seller. With a tender, you often see the text: subject to the right of award seller. This means that the seller is free to choose a buyer. The highest bidder does not automatically become the buyer; reservations or motivation may also play a role. In extreme cases, the seller may also decide not to award the property to anyone.
Advantages and disadvantages of enrollment
This sales method has both advantages and disadvantages. The advantage of a completely closed system is that there is no control in the process, because no one knows whether and how much is being offered. A disadvantage can be that you miss out on a house with a small difference, an advantage is that you are less likely (unconsciously) to go over your own financial limits.
The "open auction" sales method is actually the exact opposite. All candidates get real-time insight into the remaining bids and can continue to adjust their bids accordingly until a predetermined deadline. Although this method is very sensitive to economic cycles, it is still used in the current market. At the end of the deadline, even here the seller still retains the right of award.
This selling method was still very popular among sellers and real estate agents until a few months ago because of its price driving effect. Small steps could quickly result in a large amount above the asking price. In some cases, this meant that consumers bid far above their own limits just to get their hands on a home.
Advantages and disadvantages of an open auction
Now that the market has calmed down a bit, this principle is counterproductive. Candidates can see that there is less interest in a property and adjust their bids accordingly in real time.
Finally, we see that the sales method Regular Bidding is making a comeback. In this form, the candidate is given the opportunity to submit an opening or closing offer to the broker. The bids then come in to the broker and seller without a deadline. The seller and broker are ultimately free to enter into negotiations with certain candidates one at a time or award the property directly.
What is an opening proposal?
An opening proposal, as the name suggests, is a proposal to open the conversation with the seller. In this proposal, you can state what the home is worth and what the reservations are for your offer. The seller is free to reject this offer without giving reasons, enter into negotiations, or accept it directly.
What is a final proposal?
Unlike an opening proposal, the final proposal (or an extreme proposal) is more firm. With this, you as a candidate indicate that this is the extreme you are willing to pay for the home, combined with the suggested conditions. A seller can reject or accept this proposal.