What’s a Best and Final Offer? | Jargon Busting
You may have heard of “best and final offer” before. But what are they and when do they happen? We break down what they are when they are used and what to expect of you as a buyer or seller. Let’s take a look.
When is the best and final offer used?
A best and final offer is a sales technique typically used in a highly competitive housing market, that leans in a seller’s favour and when popular properties attract a significant amount of interest.
The principle of the approach is to get the best possible deal for the person selling the property. All interested buyers are invited to put forward their most compelling offer to the seller confidentially. The seller then has several offers on the table to consider choosing the most compelling offer for them.
What does it mean for sellers and buyers?
For sellers, the best and final offers give them options. They can consider offers based on price, but also how ready and proceedable interested buyers are. It seeks to prioritise the most serious bids. Allowing sellers to act quickly and sometimes even greater prices can be achieved.
For buyers, a best and final offer is not ideal, especially if you really like the property. It means you’ll have to think carefully about not just the price but also what you are offering that might be compelling to the seller. For example, if you are chain-free, you can offer a flexible completion date.
The whole process of a best and final offer can feel stressful. So the way you submit your offer and how you structure it is super important.
How does a best and final offer work?
An estate agent may suggest a best and final offer strategy to their client, when there are multiple expressions of interest or offers on a property. The process entails:
- Set a deadline and requirements: This decision is communicated to all interested parties, setting a clear deadline by which the agent must receive all submissions. They may or may not specify requirements or preferences, the seller has for the offers (e.g., no chain, quick closing). Offers should be accompanied by proof of funds or mortgage pre-approval letters to demonstrate the buyer’s financial readiness to proceed.
- Evaluate offers: After the deadline, the seller and their estate agent will review the submitted offers. Often, they’ll use a set of criteria, such as the offer price, the buyers’ financial position, the buyer’s ability to proceed quickly and the proposed closing date, are also considered. The goal is to identify the offer that best meets the seller’s needs and preferences.
- Offer acceptance: The seller accepts the offer that they find the most suitable. This is the offer that presents the best overall terms for the seller. Once a decision is made, the estate agent informs the successful buyer, and the property is taken off the market. The estate agent also communicates with the unsuccessful buyers to inform them of the outcome.
- Contract proceedings: Following acceptance, the usual property transaction process resumes, where solicitors handle contracts and conduct necessary searches. Finally, the sale will move towards the exchange and completion.
It’s important to know that the way “best and final offers” work in Scotland is different from England. Due to different legal systems and traditions. This process is called “offers over” when you buying a house in Scotland. It is somewhat similar to England’s system but has its own unique rules.
The role of estate agents
Estate agents act as the crucial link between buyers and sellers. A good estate agent will be able to guide you through every step. Ensuring that all parties involved receive clarity and fairness throughout the best and final offer process. They’ll also be able to assist you in evaluating offers not just on price but on overall terms. Helping you in making a well-informed decision.
Last Updated: September 22nd, 2024
