What is Sale by Tender? How the Sealed-Bid Process Works in the UK

What is Sale by Tender?

Sale by tender is a method of selling a property where interested buyers submit sealed written bids by a specified deadline. The seller reviews all bids and accepts the highest, though they are under no obligation to accept any bid. It is used when a property is expected to attract strong competitive interest, when a seller wants to transact quickly on a defined timeline, or when an estate agent wants to avoid protracted multi-party negotiations.

Informal Tender vs Formal Tender

Informal tender (best and final offers) is the most common form. Interested buyers submit their best offer by a set date. The seller selects their preferred buyer. Either party can still withdraw before exchange.

Formal tender is used for some development sites and commercial property. Buyers sign and submit a completed contract with their bid, the seller executes the contract upon accepting it, creating a binding agreement immediately.

How Buyers Should Approach a Sealed-Bid Process

• Establish the maximum you would pay before submitting, do not inflate beyond genuine affordability
• Obtain your mortgage agreement in principle before bidding
• Check the sold price history of comparable properties on Property Passport UK before deciding what the property is worth to you
• Consider including a short personal letter with your bid explaining your position, some sellers respond to certainty of completion over a marginally higher offer

Advantages and Disadvantages for Sellers

• Creates a defined timeline; encourages buyers to submit their best offer upfront
• Reduces protracted negotiation and is useful in a competitive market
• However, it can deter buyers uncomfortable with the process
• In an informal tender, the seller has no certainty until exchange

After a bid is accepted in an informal tender, the process reverts to standard conveyancing, the transaction proceeds to exchange and completion in the usual way.