Over the past 12 months, those actively searching for a property probably encountered properties that were very popular. Each interested party may be asked for a best and final offer by the seller and agent in order to fairly select the buyer.
What is a best and final offer? All interested parties in residential property are often required to submit final bids for a property by a particular date and time using the best and final offer process.
In cases where there are several competing bidders, estate agents usually use this more subjective method to select a successful bidder. This is the most common scenario in a busy property market.
Why do estate agents ask for best and final offers? Often, buyers find this method of pressure to be frustrating and wonder why estate agents use it. Although prospective buyers rarely like this scenario, it should not be seen as an underhanded tactic.
When assessing all possible buyers and selecting a buyer that best suits the seller's future plans, best and final offers are often the most fair method for sellers.
How do you win? Especially with such high stakes, a best-and-final scenario can feel challenging, especially when you're competing against other parties who have just as much passion for the property.
Maintaining a level head is essential. When you intend to live in a home for many years, paying a little more than the usual price can sometimes make sense. Other times, an inflated price could prove very costly. The highest offer isn't always the best.
You must present yourself in the best position to match the future plans of the seller. Buyers should try to determine the seller's motivation for selling.
How much to offer Consider what nearby similar properties have recently sold for to come up with a fair price, rather than picking a figure out of the air.
Having comparable evidence will help you determine how much over the odds is reasonable if you want to win over other buyers. There's a challenge in not overpaying for a property you intend to live in for the rest of your life.
Those applying for a mortgage should thoroughly research comparable recently sold prices. You may run into trouble if the lender down-values the property and refuses to lend the full amount even if you put forward a high bid and are successful.
If you miss out on a best and final offer, it's better to do so knowing you couldn't do better.
Included in your offer Regardless of whether it's a best-and-final scenario or a less pressured setting, it's best to present an offer in writing.
You should be clear on the following points and explain how they align with the seller's intentions:
Current Position – do you have a chain-free position, are you under offer, or do you need to sell?
Financing – do you plan to get a mortgage, what is the loan-to-value, how much deposit will you be paying, or will you be paying cash?
Time Frame – not every seller is in a hurry, indicate that you intend to proceed at the seller's pace.
Personal situation – Explaining why you are interested in purchasing a property can show your commitment.
Final Offer– finally, the price you are willing to pay
You can show readiness by including the details of your solicitor if you have one in place.
Is it always about the highest bid? It is not always the highest offer that sellers choose, contrary to popular belief. There have been many cases where the successful buyer was not the highest bidder in a best and final offer.
A variety of factors can influence a seller's decision, such as timeframes, the buyer's position and ability to proceed, or how they're financing the purchase.
Are they legally binding? Despite not being legally binding in the UK, best and final offers are a respected method of selecting one buyer and proceeding exclusively with them.
Can you counter offer once a best and final offer has been accepted? Although you technically can counter best and final offers, it isn't advisable since sellers rarely entertain other offers once they choose a buyer.
You may find yourself in this position at some point in the future, and I hope this guide helps you along the way. Even though the selling agent represents the vendor, they are not your enemy - feel free to ask for their advice.
We are always available to answer any property-related questions, even those that aren't about a house we are selling, so please do give us a call if you just need some third-party advice!
