What is Informal Tender?
In the process known as ‘For Sale by Informal Tender’ a property is valued, the vendor pays a one-off admin fee (normally £360 incl VAT), rather than a percentage of the selling price, and the property is then marketed for a set period of 2-6 weeks, during which time an open-house event will take place, enabling potential buyers to view the property. The asking price will not be stated but a guide price will be given. Written offers will be invited (sealed bids) and a closing date for such offers published.
All offers are opened at the same time. The vendor is not committed to accepting the highest or any offer. The offer is not binding and on acceptance of any offer, the transaction proceeds subject to contract.
How is it different to a traditional method of sale?
With the traditional method of sale, vendors are informed of offers as they are made, meaning they may take the property off the market before many buyers have even had a chance to see it. With Informal Tender, the property remains open to offers, which are submitted by sealed bids, for the agreed marketing period. Anyone making an offer must declare their affordability and buying position. After the deadline for offers has closed, all the tenders are opened and the vendor can then choose which offer is most suited to them.
To purchase a property which is for sale by informal tender, the successful buyer will pay an introduction fee of 2.4% incl VAT of the contracted sale price or £4,200 incl VAT (whichever is greater) to the agent. This fee becomes due for payment on exchange of contracts. The total fee will be confirmed in the memorandum of sale and must be lodged with the purchaser’s solicitor prior to the exchange of contracts and settled by the purchaser’s solicitor within 10 days of completion of the sale. Interest may be charged at 4% per annum above Barclays Bank base rate if the account remains unpaid after this time.