An informal tender process is sometimes used to sell properties. Each interested party who would like to put forward a bid for the property in question is required to do so by a specific time and date. Each bid must be placed in a sealed envelope. This ensures none of the potential buyers would know what any of the other participants are offering.
The process is called an informal tender because it is not legally binding. If a buyer makes an offer as part of the process, they have the right to withdraw it even if the seller chooses their offer and accepts it. Similarly, the seller may consider all the offers they receive and decide not to accept any of them. Hence, the informal tender term.
When a seller decides to use the informal tender process, they will usually pay a fee to the estate agent to conduct the process on their behalf. This is done instead of giving the estate agent a percentage of the price the property eventually sells for. The property for sale is then offered via an Open House process, where anyone interested in making an offer can visit and look around to view it in more detail. They do not need to make an offer by doing so, and as previously mentioned, they would not be held to any offer they did make. However, they must be able to confirm them can afford to buy the property. This ensures their offer can be viewed as a serious one. Only after the designated viewing period has ended does the seller open all the sealed bids and select one.
It was quite hard finding a picture of an informal tender process so instead we have a picture of a tender moment 🙂