“Best and Final offer”...

30 Replies

...I usually get the feeling this is BS. “We have multiple offers, we need your best and final offer”

Anyone else feel the same way?

Gonna have to get used to it...it's part of the business.  You just have to determine your criteria and what you are willing to pay and be unemotional with the process.

depends on your market but is common in active areas stick to your criteria and you will find out if it was ******** after the house sells
Originally posted by @Robert Naucke Jr :

...I usually get the feeling this is BS. “We have multiple offers, we need your best and final offer”

Anyone else feel the same way?

So what if it is? ie. Either: your "Best and Final" is successful, or, you must move on! My 2c...

@Robert Naucke Jr   It depends on the property and market conditions.  If the property was listed way below market value then it does not surprise me.

I tend to ignore it when they say that.  I give absolutely no response.  If I am using a buyer's agent I tell them to do the same.

Thanks, it’s happened twice in the last month....the first one I didn’t raise my offer at all and got the deal. Today we actually went $500 above asking, should get an answer tomorrow.

Brent, I just don’t think realtors should lie, but I understand they are trying to get the most money for their client. It just rubs me wrong.

It’s probably 50/50 true or BS hyping.

But as others have said don’t start a bidding war with yourself. Decide if it’s worth raising your bid, and if so by how much. If you have been in the market for a while you probably already know what others are bidding around price wise.

I would say 90% of the offers we put in get that response. A few years ago I thought it was mostly BS....now it seems true....as many places end up going above list.

Originally posted by @Robert Naucke Jr :

Brent, I just don’t think realtors should lie, but I understand they are trying to get the most money for their client. It just rubs me wrong.

I reckon Agents/Sellers should ask for "best and final" offers - straight up (and mean it)! That would sort them out. If the Seller then says 'no', those Buyers would know: they're out! 

That way, the Agent has already done their job properly! [By the way, many Agencies do do that!]

@Robert Naucke Jr @Brent Coombs - I’ve had issues with investor buyers answering a highest and best with a marginally improved offer, then trying to bid again when they lose. My thoughts: (We lose) I put in your Highest and Best! Don’t tell me you really wanted it and you have an extra $5000 cash sitting around. I told you there were 11 other offers as stated by the listing agent.

I always wonder what the counterfactual is. Could we have gotten a win for less? The competition generally helps the seller.

100% of the offers I have placed since being in NY have asked for best and final offer. Every single one someone else comes in higher than me... I have learned when they say best and final, give your top dollar. If you are giving your max offer, and you lose, you have avoided what could have been a bad deal (based on your research).

Even if the seller is asking for it as a way to get some more money out of you and you alone, as much as that would sour me, as long as your numbers work, at the end of the day the deal is a deal. Usually my first offer is really close to my B & F, maybe a few thousand off, so it's not a huge spread. I have had some deals where I low balled it and they asked for best and final and I had to come up a lot. Still didn't land the house, so someone was willing to pay more.

This is the game, I expect it, plan for it, and then when it happens send that high bid and see what happens.

@Robert Naucke Jr ,

Not going to lie, I often think it's just a realtor being lazy and not wanting to do counter offers, but it's a part of the game.   You just gotta realize what your top dollar is, and stick with your price and feel confident.     Can't beat it join it!

@Robert Naucke Jr   Like any profession, I'm sure there are shady real estate agents out there.  That said, I think the vast majority are ethical.

For me, that means that I will not tell buyers that I have multiple offers unless it is true.  However, if I get two active offers on a property I will absolutely tell both buyer's agents that we are in a multiple offer situation and I request your highest and best offer by tomorrow at 5 PM.

PRO TIP: One way to avoid overpaying is to use an escalation clause in your offer, i.e.

"BUYER will raise his bid to exceed any other bonafide offer by $1,000 to a maximum price of $XXX,XXX.  Seller must present the competing offer for verification.  Surname may be blacked out to protect privacy"

@Charlie MacPherson thanks, we will be using this strategy on a different property tomorrow. My agent has never used an escalation clause before. Where should I tell her to add this clause, and I’m going to use the exact wording you used (but $500 instead of $1,000).

@Robert Naucke Jr It should be part of your offer. In MA, we are a 2 contract state. First a written offer, then after acceptance and due diligence (normally 10 days), a P&S.

For us it has to be in the offer.

"Best & Final" are just empty buzz words designed to get buyers into a frenzy, nothing more. Nothing is "Best & Final" until a sales agreement is signed. 

@Ryan D. I suppose things are different in in different states, but what you're saying definitely isn't true here in MA.

I cannot state that there are multiple offers if it's not true.  It's a violation of state law.  (See MGL Chapter 93A - the consumer protection act)

But once I do have multiple offers, I notify the parties that we are in a multiple offer situation.  That's when I ask for final and best offers and I do that because I'm required to act in the best interest of my client.

I've been on the receiving end plenty of times when I'm representing a buyer.  I review the situation with my client and let them make their decision.  As often as not, we leave our offer as-is.

So the term has actual meaning.  Anyone who thinks it's just meaningless jargon or a as @Linda D. suggest, a "lazy agent" is badly misinformed.  

@Robert Naucke Jr This is not uncommon at all and is a part of the real estate business. My clients here in Connecticut are often in multiple offer scenarios where highest and best is called for by the sellers agent.

In these situations, I recommend going as high as your numbers are telling you to go. If the way you are figuring out your numbers is off and thus is leading to your offers being low then that is where an agent with investing and market experience can fill in the gaps for you.

@Charlie MacPherson - I appreciate your insights Charlie, as you mention there are undoubtedly state-to-state differences. I've been in the Ca, Ma, and FL markets, and have regularly experienced the "best & final / highest & best" sales push in all three (is odd NOT to see it here in Ca) - I've seen agents directly state this on day 1 of an open house, & I've seen it advertised in on-line RE postings as well, etc. Does the using of the words "best & final" carry some legal significance in Ma?

There is a distinction to be made here: A sellers agent claiming there are multiple offers, and asking for your "best & final", are two different things. 

Falsely claiming there are multiple offers on a property carries some consequences, as you point out. Asking for "best & final / highest & best"  causes buyers to think there are or will be multiple offers, but the statement itself is not making any claims. 

Again, please educate me if the term carries any legal significance in your markets, as I am genuinely curious.

Here's one I pulled from Trulia just now, been on the market for 3 days. Stated right in the advertisement "Sellers are looking for highest and best offers". Well, no kidding. Show me the sellers who are looking for the "lowest & worst offers"! It's just marketing, intended to whip buyers into a frenzy by making them believe there are/will be multiple offers (without actually claiming there are). 

Happens on every deal of mine.

Is it legit? probably SOMETIMES

I've learned to ignore it honestly, I make my offer and move to the next one. Single offer is highest and best, I'll renegotiate when I need to. It prevents me from lowballing, but it keeps the speed of things up which I highly value.

I honestly cant remember the time I sold a house and didnt have multiple offers. I think maybe 1 I sold last year had a single offer I kind of recall. But other than that multiples on everything thr last 5 plus years.

Now just because there are multiples, that does not mean they are acceptable offers.

@Ryan D.   I don't think the term carries LEGAL significance, in the sense that it binds the seller to a particular set of offers or course of action.

The way I see it used here seems to be less casual than the example you presented.

That said, I did precisely that when representing a seller from BP on a sale in a VERY hot market recently.

@Johnny Quilenderino had an investment property in Quincy Center, MA - possibly the single hottest market in MA.  Knowing that, I orchestrated a bidding war.  In that listing I said something to the effect of "no showings until the first open house on Sunday from 1:00 to 3:00.  Final and best offers are due Monday by 6:00 PM.

That meant that I was not going out for another round of bids afterward - and I stuck to it.

I was able to get 7 offers and sold the property for $59,600 over asking - and got the high bidder to waive his home inspection altogether.

I think in this market, it's perceived to be a matter of ethics.  If you say final and best, the only way I'd go out for another round of offers would be if there were two that were the highest and were completely identical to each other.  I'd expect the same from other agents - though there are always agents out there who might not adhere to the same standards.

You're right about how some agents throw silly words around.  I occasionally see "This property reflects Value Range Pricing.  The seller will entertain offers between $475,000 and $500,000."

Does that mean that the seller won't entertain an offer of $505,000?

I hope that's helpful!

@Charlie MacPherson your post about orchestration of a bidding war got me thinking. This type of activity leads buyers to do foolish & irresponsible things, such as waiving home inspections, etc. Of course its not the sellers responsibility to make sure buyers act rationally....that being said, does it not seem somewhat...unscrupulous...to encourage this type of behavior from people looking for a home? 

I'm not talking about investors (who are running a business & are aware of, or should be, the risks involved), but for the average person buying a home for their family, there is no way they are going to know there is termite damage, or wood rot, or mold, etc., hiding behind the fresh coat of paint...or water damage, or faulty & dangerous electrical work, or disastrous plumbing, etc...there is no way they are going to know any of this with out the benefit of a professional inspection, and agents (BOTH buyers & sellers agents) actively encouraging this type of behavior, seems unethical. To me this smacks of the used care salesman whipping buyers into a frenzy and convincing them to buy the car without ever looking under the hood or taking it for a test drive.

Naturally, even an good agent cant MAKE a buyer retain an inspection clause, particularly when the next buyer behind him is willing to waive it.....though if everyone was jumping off a bridge. How do responsible people compete in a market when your competition is willing to do such reckless things to win? 

I don't intend this to be a personal critique on any one agent, its more of an observation on the industry in general, and the things people do in markets (particularly strong sellers markets). 

Originally posted by @Ryan D. :

@Charlie MacPherson your post about orchestration of a bidding war got me thinking. This type of activity leads buyers to do foolish & irresponsible things, such as waiving home inspections, etc. Of course its not the sellers responsibility to make sure buyers act rationally....that being said, does it not seem somewhat...unscrupulous...to encourage this type of behavior from people looking for a home? 

I'm not talking about investors (who are running a business & are aware of, or should be, the risks involved), but for the average person buying a home for their family, there is no way they are going to know there is termite damage, or wood rot, or mold, etc., hiding behind the fresh coat of paint...or water damage, or faulty & dangerous electrical work, or disastrous plumbing, etc...there is no way they are going to know any of this with out the benefit of a professional inspection, and agents (BOTH buyers & sellers agents) actively encouraging this type of behavior, seems unethical. To me this smacks of the used care salesman whipping buyers into a frenzy and convincing them to buy the car without ever looking under the hood or taking it for a test drive.

Naturally, even an good agent cant MAKE a buyer retain an inspection clause, particularly when the next buyer behind him is willing to waive it.....though if everyone was jumping off a bridge. How do responsible people compete in a market when your competition is willing to do such reckless things to win? 

I don't intend this to be a personal critique on any one agent, its more of an observation on the industry in general, and the things people do in markets (particularly strong sellers markets). 

 That is like saying a defense attorney is being unscrupulous by keeping their client out of jail.  Buyers/sellers hire agents to do the best job for them. Agents have a fiduciary duty to act in their clients best interest.  They are bound by law to do this.  There is nothing unscrupulous at all about this. The agent is a professional hired to do a job and they should absolutely do this.

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