Wednesday, 12 December 2012

The Sealed Bid comes unstuck!

It's late September.

The only thing we've seen worth buying is a potentially wonderful, derelict Chelsea flat owned, I subsequently discover, by an F-ing famous TV chef.

It has an enormous garden (by London standards) and is opposite the even larger Physic Gardens.

My wife wants to move in tomorrow, so it passes the biggest test of all. (She hasn't quite come round to the idea that we might not move in!)

The trouble is the plummy accented agents are in a bit of a muddle about the price. It seems to go up £100k in the space of 24 hours without so much as an explanation or apology.

(To some Chelsea agents price is clearly an incidental part of the process. As perhaps it is to some of their clients.)

Sadly, after much agonising we have to pass on the anticipated bidding war. We don't have quite enough cash to both buy it and completely gut and renovate.

So, when my stepson arrives on a whirlwind trip from Hong Kong and over dinner says he'd like to come in as a 50/50 partner and effectively double our available cash, its cause for celebration and renewed effort in our search.

The flat, however, has already gone. nuisance, as the owner might say.

William coming onboard isn't just a financial bonus. His interest in property makes my own look decidedly amateur.

He recently switched careers from shipping to property, and as well as working in HK for one of the world's most prestigious top end agents has put together a buy-to-let portfolio on the island.

Will's iPad is permanently locked on to property websites, and within a few hours of landing in the UK he's been to see most of the agents in our part of town.

I'm exhausted just watching him, but his enthusiasm and professionalism are highly infectious.

Desperate to impress him with my choice of buying agent, I badger Tracy to find us something to view. Anything!

"Well, there is a little studio flat. There may be money in it", she says, by now somewhat desperate herself to earn a fee.

Normally I'd baulk at such a small project, but this one's a 5 minute walk away and has one of the most prestigious addresses in SW London.

On one side of the street, a truly magnificent crescent of white stucco fronted £12m mansions look down imperiously over immaculately maintained communal gardens. On the other, our side, imposing red brick residences hide high ceilinged, big proportioned mansion apartments.

It's London as fairy tale. The sort of area you walk through and wonder if anything so niggling as a faulty washing machine or dodgy light bulb ever troubles the ordered, rich lives lived there.

While I'm still waxing lyrical in my head, the agent lets us into the ground floor flat. It's awful.

Of course it's in serious need of renovation, that's a given. But, in addition, the owner has managed to make the entrance into a dark, claustrophobic and, frankly, forbidding space.

Since the flat has wonderful large bay windows overlooking the gardens opposite, this isn't an easy feat. Hats off to the owner, they really know how to ruin a flat.

The apartment is supposedly almost 500 square feet, but around a third of this consists of a bedroom mezzanine designed for those who stopped growing at the age of 8.

Going to bed would be more of a challenge than a pleasure, we decide. (My back is already beginning to ache just thinking about it.)

Still, for all this, the world and his wife are queueing up to view, the agent manages to say with a straight face.

The agent is very young. "Very green", Tracy whispers conspiratorially, "we can work with this guy."

In his enthusiasm, our conservatively suited top end 'just out of public school' dogsbody does indeed give away in some detail the current state-of-play.

We adjourn to the local cafe (the mind numbingly overpriced yummy mummy hang out Aubaigne) to do our sums and agree a strategy.

In the absence of any alternatives, we decide to go for it. A small project will, we agree, be a good first test of our partnership, our suppliers and our ability to create value.

Tracy provides comparables that show a potentially significant uplift in price per square foot, if we get it right. IF.

First we have to buy it. And that's not as easy as we had hoped.

Our first offer is batted back with news that the client is asking for 'best and final offers' above the asking price by the end of the week. In other words, it's sealed bids at dawn.

For the uninitiated, a sealed bid is just what it sounds like. All potential buyers submit written offers together with supporting financial info by a set time. The agent then opens them all at the same time, and the winner takes all, as in an auction.

Well, that's how its supposed to work. In theory.

As Will boarded his plane back east, we bandied various offers around. Tracy recommended a figure £20k above asking price. I went a fraction higher, and Will even higher. Eventually we settled on a figure generously, or so we thought, in excess of the original price and the 'sealed, best and final' offer went in.

Later that same day, the agent rang Tracy to say we'd lost out.

Oh well, back to the search, I thought. There'll be other things out there. It's a shame, but hardly catastrophic.

But, just as I'd got used to the idea of losing, the sealed bid came unstuck.

The agent calls to say that maybe, just maybe, if we raise our offer a little we might be in with a chance. The owner hadn't yet been contacted with the results of the sealed bid. He or she was away.

Now this isn't supposed to be what happens. Especially when one of London's top agents is involved!

But I wasn't about to get all ethical about it. Not when there was still a chance we'd win.

We did our sums again, pushed the boundaries a bit and went to £50k over asking. (A not inconsiderable percentage of the original asking price.)

Within hours, our offer was accepted.

Although I'm pleased with the result, the process does raise doubts about the validity and finality of 'sealed bids'.

I suppose agents will say that no two cases are the same, and that all kinds of other factors come into play alongside the actual price offered. Mmmmmm!

Still, I'm glad to be the beneficiary of this 'unstuck' sealed bid. As a loser, I'm not sure I'd have been quite so charitable about the process!

* Next time - what the hell do we do with this tiny, very expensive studio flat? And some photos, I promise.

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