What is the difference between a firm, and unfirm offer?:-
A ‘seller’ will be given an ‘unfirm offer’
where there is no buyer in place as yet, but a minimum firm price
will be offered in the contract which the ‘seller’
will expect to receive. These offers are typically used by market
maker brokers, as opposed to the traditional market maker who
will buy the policy themselves. Like market maker brokers, these
offers are also used by ‘Endowment Trading Platforms’.
Both of these company types will try to sell the policy on your
behalf for a specified length of time, which can vary from 4-28 weeks or not even sell at the price quoted
Before signing any unfirm contracts, consumers should be
careful to check what length of time the contract ties the seller
into, and whether there are any fees incurred from an early exit,
or whether the seller is able to exit from the contract as a result
of the company not managing to sell the policy at the quoted price.
If after this period of time there has been no interest in the
policy at the quoted price, the ‘seller’ will be contacted
to arrange a further length of time to sell the policy.
A ‘seller’ will be given a ‘firm offer’
for their policy when a buyer is in place who is prepared to offer
a contract for sale at a firm price. These prices can often be
just as competitive as an unfirm offer as the buyer is already
in place. But the seller benefits from the speed of sale as the
offer is a realistic market valuation from the outset. 1st 4 TEPs
specialise in offering firm offers to our clients, always ensuring
that a buyer is in place and willing to pay the firm price which
is quoted to the ‘seller’. This provides you, the
‘seller’, with the benefit of a firm offer, which
will therefore provide you with the confidence and guarantees
that you require in the sale. The ‘seller’ will also
benefit from the speed of a sale based on a ‘firm offer’
as all of the hard work of finding a buyer has already been done.
Firm offers are still subject to the Policy Purchase Terms of
Business, with the main point being that all market makers retain
the right to cancel should bonus rates fall prior to the completion
of the transaction, or if un-notified alterations or incorrect
information has been provided to facilitate the sale of the policy.
Is selling to a market maker with a firm offer best for me?
This decision is dependent on several factors and can
only be decided by you, the ‘seller’. The two major
factors to consider when deciding which type of offer is most
preferable to you are:
• the timescale in which you wish the sale to complete.
• the guarantees that come with a firm offer.
At 1st 4 TEPs, our unique access to the overseas investment market
means that we are able to provide the ‘seller’ with
a firm offer which could also be competitive with the prices quoted
in an unfirm offer. Ultimately the choice will be down to the
‘seller’ depending on their specific needs to make
an informed judgement. Should a client have any doubt they should
seek the advice of an Independent Financial Adviser.
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