Sealed bids are used frequently when it comes to selling real estate. Brokers have been turning to the sealed bid auctions as the economy has decreased. It is a way for the brokers to get people more interested in buying houses rather than the conventional way. The seal bid creates a buzz on a property and in return more people become interested in buying it.
Auctions like this were popular in the boom years and in recent years have become a way for people to sell their property quickly. “In contrast to today’s sealed-bid auctions, those of the boom years typically were used to help organize a pre-existing bidding war and often didn’t have a minimum bid or a contract.” When doing a sealed bid auction today the rules are much different.
Sealed bid auctions require potential buyers to submit their bids by a certain time. They must submit them in writing to the seller. Then seller will choose which bid they prefer the most. In some cases all the bidders had to pay a 10% deposit, all the bidders who did not win got that deposit back.
This kind of process when selling and buying a house is pretty interesting. In some cases it could go badly for the buyer. If they were moving for work ect. and trying to get rid of their property quickly, and decided to use this sealed bid auction approach, they could potentially not get as much for their property as they had hoped. On the other hand if the property is in a place like New York City and there are a few potential buyers, a sealed bid auction might be good because then the buyers might bid more for a need for that property. “Sellers who want to wring every last cent of their home’s value from the purchase may prefer the traditional sale process, which allows them to play bidders off each other to increase the price.” In other cases the sealed bid auction might be the best choice for them.