You're about to make perhaps the biggest deal of your life, i.e., buying a apartment or house. Not only can this situation feel stressful, but you also need to compete with buyers who use hidden bids. What are hidden bids, anyway?
Hidden Bids
Hidden bids are bids placed by a speculator not as an official bid, but as an unofficial bid that only the broker and possibly the seller should know about. It's a bid that comes with conditions, such as time limits and the requirement that the bid be kept secret and not communicated publicly to other speculators.
Hidden Bids Create a Difficult Situation
This is not only a headache for speculators, but it also holds brokers and sellers hostage.
Niklas Rollgard, chief lawyer at the Real Estate Agents' Association, which advocates for a ban on hidden bids, tells SVT:
We think this creates chaos in the market, he says.
Even brokers like Desiree Nilsson want to see a change and tell SVT that there needs to be clearer rules.
Magnus Melin, a lawyer at the Real Estate Market's Complaints Committee, however, sees risks with a ban on hidden bids:
The question is how it would work technically. A possible risk if one were to say that the broker is not allowed to accept a hidden bid is that the bidder approaches the seller directly instead, he says.
No Clear Rules for Bidding
Bidding on house purchases in Sweden is unregulated; you can place bids that are not legally binding for the buyer until a purchase contract is signed by both parties. You can place a bid on a property and then withdraw it without any legal consequences until the contract is signed. Therefore, brokers are keen to get buyers and sellers to meet as quickly as possible, because if the buyer pulls out and changes their mind, it puts everyone in a difficult situation and forces them to start the bidding process again.
What Applies to Bidding
- The seller decides who gets to buy; it's not the broker.
- The broker must present all bids to the seller.
- Bids are not legally binding.
- The bidding process is open until the contract is signed.
- Bids can be combined with various types of conditions, such as hidden bids.
(Source FMI.se)
We'll have to follow developments and see if there's a regulation and hidden bids are banned.
