Best And Final Offers Explained
April 11th, 2022
Over the last year, house sales have reached record highs in both number of sales and property prices, which has certainly kept both vendors and buyers on their toes! With offers flying left, right and centre, it has never been more crucial to be able to decipher between offers and select a buyer fairly, when there are multiple to choose from. This is where you might be asked to put forward your ‘best and final offer’.
With the property market currently sellers paradise, we’re finding that many sales are resorting to this tactic to ensure the sellers receive the best price for their property and to speed along sales. However, contrary to many people’s beliefs, ‘best and final offer’ doesn’t purely benefit the seller. In fact, it can work in everyone’s best interest and I’m here to help explain why.
Does It Work Like An Auction?
Although some like to compare ‘best and final offers’ to an auction, there are a few ways in which it differs, which are quite significant logistically and make a huge difference.
Firstly, when asked to put forward your offer, there is only one round of bids, so you really need to put forward your best offer at the first instance. This means that you won’t get a second chance if someone else offers more than you.
Also, each of the bids put forward is done in secret. So, unlike in an auction where you can alter your offer depending on the budgets of others interested, in a best and final offers situation, you’ll find you don’t have this opportunity. It can be quite a daunting experience where you feel you’re making a blind decision, which is why many people dislike best and final offers.
How Does Best And Finals Work?
Best and final offers really is what it says on the tin and can help to ensure all parties have an equal chance to secure their dream home, whilst allowing the seller to achieve the best possible price for their property.
With complete transparency, the agent will disclose the highest current offer to everyone interested, helping them to gain a better idea of where their budget stands amongst the other buyers. This gives everyone a chance to reevaluate the purchase and decide how much they’d be willing to put forward to win the sale.
Don’t forget the importance of the word final, meaning once you’ve put forwards your offer, there is no going back! It is therefore essential you put forward your very best offer, so you don’t later regret losing the sale to another buyer that just pipped you to the post. Best and final offers is a process which is usually brought into play for properties with a particularly high level of interest, so keep your mind open and don’t let yourself become too invested in the house in question.
Each buyer is asked to put forwards their highest offer which can no longer be changed. You may also choose to put forward a statement regarding their circumstances for the purchase, helping the seller gain a clearer understanding of the buyer’s position.
The agent will then feedback the offers and statements to the buyer who will ultimately make the decision of who to accept the offer from, based on the information they have received.
Will The Best Offer Always Win?
Don’t be fooled into assuming that the best offer always wins as this very often isn’t the case at all. As sellers are usually very keen to grasp a smooth sale when given the chance, I often find that a lower offer will be accepted for convenience and security over a higher offer.
Their decision which will be guided partially by their agent, and will be balanced based on the offers they have received, along with the positions each buying party is in. First time or cash buyers often have the edge here as they can propose an easy sale which can speed up the entire situation, making their offers extremely tempting. Sellers are eager to avoid a long chain and want to avoid any sales which look like they could easily fall through and land them back on the market, so beware of this when you’re viewing properties and making your statement. Whilst it’s important to be truthful and honest, you don’t want to plant any unnecessary doubt in the sellers mind regarding your situation.
Is It As Stressful As It Sounds?
Best and final offers can be extremely stressful. After all, you don’t know what offer other interested parties may have put forward, so you’re forced to put forward your very best offer or risk losing the property of your dreams. This means that you may end up paying far more than you otherwise would have in order to secure your next home.
How Much To Offer For Best And Finals
I’m often asked how much you should offer for your best and final offer. This completely depends on your individual situation and how much you want the property in question. The most important thing to consider is how much the property is worth to you.
If you offer too little, you may be left feeling disappointed when another buyer offers more and secures the property. However, it’s also important not to let yourself get carried away in the moment and offer more than you think the property is worth.
Ultimately, you need to carefully consider the maximum price that you are willing to pay for the property and make this your offer. This way, you won’t be left feeling disappointed if another buyer pips you to the post.
You might be left thinking the process of best and final offers seems brutal, and in honesty, I agree with you! But whilst it can seem like a stressful and harsh situation to be in, it is the fairest, fastest and easiest way for a seller to seal a deal, meaning you can continue your journey of purchasing a home. Whether that means you win the bid or you’re back to browsing the market in search of your dream home, you have to keep your mind positive and remember that everything happens for a reason! If it’s meant to be, it will be and if not, your perfect property is still out there waiting to be found.
By choosing the right estate agent, you can ease the stress of this situation when it comes round by knowing a professional is there to guide you every step of the way. Resting assured that an experienced agent has your best interest at the forefront of their mind, you can sit back and relax whilst the pressure is taken out of your hands and handled by someone who has observed this process a million times over. If you’re still unsure of how best and final offers works or for more queries about your house move, give me a call on 07920 097175 or fill out the contact form below and I’ll be happy to help.