When you participate in a sealed bid offering, be sure to consider these 4 things:
1. Get the bid packet and READ it.
Understand it. Hardly any two sealed bid sales are the same. Each one will have different requirements, bid procedures, and offer/closing documents. Be sure you understand and follow the exact requirements so you don't miss the deal on a technicality...it happens! And don't assume that the bid sale you are planning to go to will just be like the last one.
2. Put your best foot forward.
It's easy to sit around and speculate on who will bid, what a reserve may be, what other people may offer, etc. I've seen, however, that it's best to make your best offer and just let it go. Sure, everyone wants to "steal" a deal by paying some ridiculously low price, but it doesn't happen as often as you'd think. Do your research on the property, figure out what works for you, and make your best offer.
3. Use an "odd" number for your bid amount.
I don't have any scientific data to back this one up, but I've seen it many times. Most people bid in even amounts like $86,000 or $1500 / acre...and the one guy who has bid $86,217 or $1513 / acre gets it. It seems to give you an edge. pick your best number and then add a tiny amount to make it an odd number!
4. Go to the bid and hand-deliver your offer.
Yes, even when you can fax or email it! GO! Be there in person and see the actual bids. You may be surprised to learn that shenanigans are not completely uncommon at bid sales. It's easy for people to silently be in partnership or devise other ways to manipulate the final "high bid" to steer the deal their way. No, it's not happening at every bid, but it happens enough that you'll want to eliminate the chance it'll happen at yours. The best way is to just be there in person (or send someone to represent you) and see all the bids for yourself.
I'm not a big sealed bid advocate. I think they often limit the best price for sellers because they create too narrow a window for market activity to fully occur, but they do have their place. If you participate, use these simple tips to help you win some.
- Pat Porter, Broker for RecLand Realty, Monroe, LA