What Is a Best and Final Offer?
The best and last offer that a potential buyer is prepared to make for a certain property is known as the “best and final offer.”
The best and final offer is just what it sounds like: the finest offer that a potential buyer is ready to provide for a certain property. There are a number of circumstances in which sellers could want the best and last offer, but one of the most prevalent examples is when more than one bidder is competing to acquire the same property.
The Meaning of the Terms “Best and Final Offers”
Multiple offers on a single property are not uncommon under conditions characterized by strong demand, such as a market that favors sellers. It’s possible that the seller’s real estate agent will urge each interested party to submit their best and last offer rather than negotiating individually with each potential purchaser. In most cases, this request will be accompanied by a few days’ notice to provide potential purchasers sufficient time to examine all of their choices before to the deadline for submitting bids.
The expression is comprised of two distinct phrases, each of which has a particular meaning:
- The best offer will include a number of factors, such as the price, conditions, financing, and closing dates, over which the buyer will have some degree of influence.
- The prospective purchaser has indicated that this is their last offer, and once it has been submitted, there will be no more discussion about the purchase of this property.
The best and last offer made by a buyer is their last and only chance to compete for a property. They will need to use all of their homebuying negotiating expertise in order to offer themselves the greatest possible opportunity of getting selected. To make their offer stand out from the competition, they may want to consider making an offer that is higher than the asking price or eliminating additional hurdles to the closure, such as doing away with conditions.
- Acronym: BAFO
How to Determine the Best and Final Offers
Let’s take a look at an example of a buyer making their best and last offer from both the buyer’s and the seller’s points of view.
Homebuyers Should Think About the Following
Let’s imagine you and your significant other have decided to look into purchasing a property in San Francisco. Your real estate agent has located the ideal home for you to purchase. It was advertised less than 24 hours ago and has a price that is lower than the value it now has in the market. You submit an offer as fast as you can, but the following day, your agent calls to inform you that there are many offers on the table already. The agency representing the sale has requested that all interested parties submit their highest and most comprehensive offer within the next three business days.
You had initially made your offer dependent on the successful sale of your present residence; but, in an effort to make your offer more competitive, you have chosen to remove this condition from your offer. You have also spoken with your real estate agent and come to the conclusion that you should make an offer that is far more than the price that is shown on the property’s MLS listing. Following a lengthy conversation, your representative will finally submit the offer. Now there is nothing left for you to do except wait.
Things that Sellers Should Take Into Account
Let’s take a look at things from the seller’s point of view now. Your home had four bids in the first twenty-four hours after it was listed due to the competitive nature of the market. Your real estate agent recommends that you seek the best and final proposals, and by the time the deadline arrives, you have received follow-up offers from all four interested parties.
It is important to take a number of factors into consideration before settling on an offer to accept. Because they come with secured money and may be completed more quickly, all-cash bids can be quite alluring to prospective buyers. It’s always a good idea to look at offers that don’t have any strings attached, such the need for a home inspection or the sale of another property.
Take for example that you have gotten two offers: one for all cash that is slightly below the asking price, and another that is a few thousand dollars more than the asking price. It is possible that you may decide to take the all-cash offer if convenience is one of your top priorities. In spite of the fact that it is cheaper, a swift closing ensures that you will be free of the property and have the money in your possession much sooner. On the other hand, if you want to maximize the amount of money you get from the sale of your property and you are not in a hurry to relocate, you should probably go with the offer that is greater.
Is It Worth It to Accept the Best and Last Offer?
This is a challenging topic to answer, and the honest answer is that it is wholly dependant on the circumstances of your case. If your first offer leaves some area for negotiation, you could evaluate if it would be beneficial to raise the price or modify the terms of the contingencies involved. You also have the option of resubmitting your first offer as if it were your best and last one.
You are under no obligation to submit a best and last offer; another option is to just walk away. You are not required to take part in a bidding war if the property does not seem to be the perfect fit for you, if you have already given your highest price, or if you are not prepared to compromise on other aspects of the purchase.
When it comes down to how much of a bargaining concession you are prepared to make, you should ask yourself the following questions:
- Do I have the means to make a larger payment?
- How desperately do I need this piece of real estate?
- Exist any more houses on the market that won’t need you to submit numerous offers?
- Which potential outcomes am I ready to give up in order to give the impression that I am more competitive?
When you have the answers to these questions, you will be able to determine whether or not it is in your best interest to submit a best and final offer.