Yes, there is.
Everyone who buys a home in Norway must go through a bidding round or bid negotiations. We practice what is known as the auction principle, with an open bidding round, where the highest bid wins the contract. In the vast majority of cases, the estate agent acts as an intermediary and administrator of the bidding round. How the bidding round is to take place is regulated by the Real Estate Brokerage Act.
Seller’s and buyer’s interests are obviously conflicting in a bidding round. The seller wants the best possible price and is supported by the estate agent to achieve this. The buyer wants the lowest possible price and is normally on his own to look after his interests in the bidding negotiations.
This imbalance, where the buyer stands alone against a professional party, makes the bidding round a nightmare for many buyers. There is often considerable competition over the objects to be purchased. This means that the only option is to register as a bidder via an estate agent, participate in the carousel and successively bid higher than the last bidder. You risk paying too much in relation to the current market level or losing the bidding round. Not always because the money is not enough, but because the fear of losing money becomes too great. A fear that can be a healthy reflex, especially if two bidders outbid each other by several hundred thousand.
Secret bids and bids directly to seller
However, there are methods that the buyer can use to avoid the traditional bidding round, namely closed/secret bids or bids directly to the seller.
These are today completely legal methods. In proposals for amendments to the Real Estate Brokerage Act, the rules for this have been discussed. It is proposed to prohibit closed or secret bids.
The buyer needs alternative tools in the toolbox.
As a home buying adviser, I have been reluctant to recommend home buying clients to make offers directly to the seller or to practice secret bidding. It has worked quite well to use the normal method with regular bidding rounds.
In recent years, however, it has been a tough housing market for buyers. With few homes for sale, high demand and subsequent crazy bidding rounds, especially for attractive homes. Then it has proven to be nice to have alternative tools in the toolbox, such as bids directly to the seller and secret bids.
Bid directly to the seller.
Imagine that you have lost four rounds of bidding and suddenly see that your dream house is for sale. You cannot bear the thought of going through yet another bidding round but want a quick and painless negotiation process where you hopefully secure the home. You have a fairly good overview or get help assessing the market price for the home. Wouldn’t it then be tempting to go directly to the seller with an offer within acceptable market level?
Such a procedure, which is called “kupping” in Norwegian, is obviously not so fun for the other interested parties who are waiting for the viewing and who are told that it has been cancelled. However, all buyers have the opportunity to make a direct offer to the seller. Moreover, the method is based on the principle of free negotiation, which is important in our country.
How to do it
If you consider giving a bid directly to the seller, usually before the Open House viewing, you have to ask for a private viewing. If this is your dream home and you want to try to secure it with a bid directly to the seller, you fill out a bidding form with the top text, bid directly to the seller. Please contact me for help with this, advice about the price level and strategy.
Read also: How to bid on real estate in Norway
Secret bid can also be a good tool. This means that you make an offer, via a broker, where you make reservations that other interested parties should not be informed about the offer. It is the seller’s choice to accept the confidentiality clause, as well as to decide on the offer. If such a bid appears in the middle of a bidding round, the confidentiality clause will probably not be accepted, and the bid rejected. Unless it is sky-high, and the seller feels tempted to accept it.
But let us say that the home has been for sale for a while, and the market is a bit on the buyer’s side. There are interested parties on the estate agent’s list from previous viewings, but the new bidder wants to negotiate peacefully with the seller without waking up previous interested parties. In that case, a reservation about a secret bid can be both appropriate and timely and an important contribution for completing the trade. Something I myself helped to contribute to a little while ago. To the delight of both buyer and seller. It is therefore unwise to ban this.
The method will be probably not be used very often in ongoing bidding rounds but can be an important contribution in individual bid negotiations. Transparent processes are a good thing, but the concern for transparency must not overshadow the possibilities of achieving a good deal.
How to do it.
You give the bid as usual, either on a bidding form or digital. On “forbehold” – conditions for the bid you must write that you want the bid to be confidential to other interest parts and only be informed about to the seller. The real estate agent is allowed to convey this bid.
Maybe the seller, through the realtor, will decline the condition of confidentiality. If so, you are still in a position to keep your bid without the condition or say that your bid is not valid without the condition. Please contact me for help with the price level and strategy for the process.
As you understand, this is a little complicated. But it is important that buyer’s know about these possibilities. Especially if you see that your dream home is on the market and want to secure that it is becoming yours. If so, I will help you to choose and implementation of the best bidding process.
Boligdama – Trude Larsen
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