Tender

The tender procedure

The  greatest benefit of the tender process for you is total privacy.  All the bids or offers are in writing. No buyer is "starting low" as at auctions because  with a tender they have only one chance to secure the property and most importantly, it protects the integrity of your property in the marketplace.

The tender procedure is simple. It is just like normal offers but the difference is that all the written offers (or bids) are sealed in envelopes and place in a tender box. This tender box is locked and only the manager has the key. On tender date this box is opened on the date and time as specified in the advertising. The only people present is the real estate agent and the owners. The owners may decide to accept one of the offers, renegotiate on any of the offers (they don't have to accept the highest offer) or  they could say they are not going to accept any offer at all. All this is in private. Should they decide not to sell there is no "pass in figure" as with auctions. At auctions this pass in figure is public knowledge and may be printed in a newspaper (depending where the property is).

The tender date itself is creating urgency.  The tender can call for unconditional offers, which means buyers would need to check quality and value of the property before the tender date. This could mean a clean sale. With a clean sale you know there is finality in the acceptance of the tender.

The tender advertising could also provide for conditional offers – it depends on your personal preferences and what suits your circumstances. A conditional tender is the best way for overseas investors to buy land in New Zealand, as the offer must be conditional upon consent from the Overseas Investment Commission.

The most important thing to know is that  you won't have to lose buyers just because they are conditional buyers when you choose the tender option.

The advertised procedure should strictly be adhered to. If advertised “no offers before tender date” you and your agent may be liable for damages if you sell to someone before the tender closed.

Are you in control of matters? Yes – it is always your choice to sell or not. You can also decide if you want your agent to renegotiate with one or more of the buyers. You don’t have to accept any offer unless you advertise as such.  Remember that one buyer can submit more than one tender with different conditions and or purchase prices on each.

Does a tender get the best price? I have seen outstanding results. At auction the incentive is only to pay a bit more than the underbidder. With tender buyers need to put the highest possible price on the contract.

Which one do you prefer?

With tender you have all the buyers in competition although the prospective buyers are not together in one room on one date.  So you have the benefit that they don't know what the other tenders are. You don’t have an under bidder setting the market value. Nothing stops buyers from making high offers because they know that there will be competition especially in a good market. Buyers have no indication of the value of the other offers and they cannot trim their offers to be more in line with the other offers. This is an obvious benefit to you. If you decide not to sell there is no set market level (the so called "pass in figure") as with auction. You are protected from nosy people and from gossip. You can decide what  and to whom you want to disclose.