Property website aims to eliminate gazumping

A new website is out to make the process of buying and selling a home more honest, open and trustworthy by using an encrypted sealed bids system.Sealedbidsonline.com is being launched on the back of a Which? report on homebuying which said 50% of people did not believe that all potential offers were passed on.

Sealed bids are a growth area in London with more and more properties being sold that way. Findings by the sealedbidsonline.com team show that properties in London going to a sealed bid process attract multiple offers on average and given the potential for stress and worry for those people, sealedbidsonline.com hopes to reduce that anxiety by improving the current system.

Reasons for distrust about the current methods include suspicion that not all sealed bids are passed on to the homeseller and that bids are opened early and passed on to preferred buyers.

Sealedbidsonline.com does away with this.

The way their system works is by the property seller or selling estate agent instigating a sealed bid sale through sealedbidsonline.com.

The system works in the following way:

Property details are listed on sealedbidsonline.com

Prospective buyers receive unique passwords to make an offer

Offers are submitted, time stamped, sealed and encrypted until the closing date

At any time the selling agent can see how many purchasers have registered an interest and how many offers have been received, although they cannot see the sums offered

All offers are released at once and vendor chooses what offer to accept

Managing Director Paul Logan said: “The Which? survey suggested 50% of people do not believe all offers are passed on and clearly that’s a lot of people who do not have faith in the way things are. While sealed bids can be more secure, there is a lot of worry about all the offers being passed on – as Which? discovered – or that not all the bids are opened at the same time with some being opened early and agents tipping off favoured buyers.What sealedbidsonline.com does is ensure that all the bids are electronically opened at the same time and they cannot be looked at early. This gives people peace of mind and also saves them having to travel to the estate agent’s to physically see all the envelopes being opened at the same time. The sealed bid process is growing in England because people are seeing that not only is it a time saver compared to the current practice but it is also a potential way of homesellers making more money as people automatically offer the highest amount instead of going back and forth with different offers."

“We’re not saying that those involved in the business are corrupt or anything like that. The service we are providing is for peace of mind. As articles and the Which? survey show, there are people out there worried about their bids being treated fairly and we are a very cheap way - £20 plus VAT - of making sure their bid is in. Some may ask what’s to stop us looking at all the bids, but we can’t. The system is encrypted so that we cannot see the bids. Estate agents signing up for this show that they are beyond reproach and it helps to enhance the transparency and honesty of the house buying and selling business."

“Obviously gazumping is a big problem down south and what we’re offering could help wipe it out if seller and buyer stick to the terms of the sealed bid process.”

To start, the company is only offering the service within London but aims to expand over time to encompass the whole of the UK.

The team have already been a success in Scotland, advising a similar website at www.eclosingdate.com and their service has been signed up by a number of estate agents including Clyde Property, Corum and many other leading agents.

Paul added: “At the end of the day we just want to make the process of selling and buying a home as stress-free as possible for the potential buyers and profitable as possible for the seller. Our process helps that at at both ends and helps to remove elements of suspicion and distrust from the chain as well.”

One person who welcomes sealedbidsonline.com is ex-property developer James Rolfe. Trouble with gazumping in the Leeds area helped force James, 32, out of the business. In the summer of 2005 he was developing a number of properties for resale.

He recalls: “Dealing with gazumpers – and gazunderers - was so frustrating that it ruined my business. It would always happen on the last day before everything was set to be signed, sealed and delivered. Having heard about what sealedbidsonline can offer, it’s the sort of thing that would have saved me a lot of time, hassle and heartache and I can only hope it’s a great success for everyone’s sake.”

The company is currently dealing only with residential properties but will be expanding into commercial property soon.

PHIL SPENCER: “SEALED BID BUYING INCREASING DRAMATICALLY”
Speaking about the current state of the market Phil Spencer the TV property expert said that under current market conditions the sealed bid system for purchasing property appears to increasing at a dramatic rate.

He also said that as technology develops, new methods of delivering services may help to reassure everyone involved in the buying/selling process.

He said: "There’s been a dramatic increase in the number of sealed bids over the last year. It’s happening because of a greater number of people competing for each property and it’s effective method of achieving full market value of judging property market values. Where you are seeing an increase in sealed bids – anywhere across the country – is a sign of market forces and properties being in demand. Compared to the dutch auction system it’s seen as better. Having said that, sealed bids are a system that people may not like but they absolutely loathe the dutch auction system.

"The overall system is fairly outdated. You have to remember that it was set up centuries ago when only the elite had property to sell and the frameworkto suit sellers has essentially remained in place.With regards to accusations of corrupt estate agents and lawyers being involved, I think some of that is often sour grapes from the people who lose out on the property; I don’t believe that the problem is as substantial as is often made out.

"Having said that, I’ve been involved with sealed bid situatiopns managed by estate agents who were very good and with estate agents who were very bad. There are those who may not be corrupt but are just incompetent – and from a buyer’s point of view that can be just as bad. A lot of people don’t have faith in the system but that’s normally because they’ve lost a property or heard of someone else’s bad experience.

"The system can be abused, but as I said, a lot of the times people say that it is, it’s more a case of sour grapes or dealing with unprofessional types.

“A sealed bid system online could be one way of reassuring people that their bid is in and will be fairly considered. Obviously there will still be losers, but if everyone knows that the system is fair then that can help minimise the pain. Any system promoting a sort of digital online sealed bids service would have to remain independent and neutral so that it didn’t end up being seen as having a bias for a person or firm. Anything that makes the system look more honest, open, transparent and gives property buyers and sellers confidence in how their money is being handled is a good thing.”