Beat Gazumping With £1!

It's disheartening to be gazumped and embarrassing for the seller as well. Here's one system that eliminates gazumping which should make everyone happy.

It's a well-known fact that no one knows all the rules to Monopoly, but one rule that my siblings and I got right as children was for buying properties at auction. (Yes, you can do this -- read the rules!) However, when bidding for a property we would start at £1 and increase it by just £1 at a time. Needless to say, we didn't finish a game, so don't ask me about the rules for ending it.

If you bid £1 for a real property, you'll usually be laughed at. If you try to outbid the other guy by £1, you'll be scorned. But this isn't always the case, because back in fashion is the sealed bid. This is where all the bidders put their offers in writing and they're opened at the same time. In theory, the property goes to the highest bidder.

This is great news for people who've been gazumped. Gazumping is when a seller agrees to sell to one buyer, and then backs out if another buyer turns up with a higher offer. A report from Scottish Widows reckoned that this had happened to 3.3m buyers. It also shows that Britons are particularly dishonourable, with 37% of us being gazumped, compared with just 29% of the French, 25% of the Spanish and 18% of the Germans. This makes sealed bids look attractive.

Here are some tips for sellers on sealed bids:

• Set a minimum bid, typically this is around the asking price.
• Make the rules clear to all bidders.
• If the sale is being conducted by an estate agent, get a friend to submit a fairly high bid to make sure the agent hasn't taken a bribe to bin the best offers. It does happen!
• If you're in a hurry to sell, you could reserve the right to sell to a lower bidder if their bid is within, say, £1,000 of the top bid and if that bidder can buy straight away (subject to a survey).

And some tips for buyers:

• If several buyers are interested, there's every chance that the property will receive more than the asking price, so there's no point bidding any less than this.
• .but beware of bidding too high as sealed bids are known to lead people to bid too much.
• If you bid more than the asking price, make sure you can cover the difference, as the mortgage company will usually just lend up to the value of the property.
• Think eBay: beat the other bids by adding an extra £1, e.g. £200,001. Better yet, add £102 to make it £200,102. No sane person would bid this amount.
• .even so, don't fret about your bid too much, especially by trying to predict what crazy non-round figures other buyers might submit. If you bid what you consider to be a fair price, you shouldn't be too disappointed to lose.
• Put 'subject to contract and without prejudice' at the top of the bid letter.
• Beat the bribes! Put a note through the seller's letterbox saying that you love the house and hope they like the offer you've submitted to their agents. Include your phone number.

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