Date Published 10 July 2015
With the housing market showing little sign of slowing up, it is not unusual for an agent to have no alternative but to ask all interested buyers to put forward their best and final offer.
To coin a phrase, this is what it says on the tin, your offer should be the best offer you are prepared to make on a property and once made it will be your final offer and no further opportunity will be given for you to increase.
When a property receives interest from several potential buyers, maybe because it offers a unique opportunity or is situated in a location where houses are rarely offered for sale, one of the fairest ways for a professional estate agent like Hentons, to achieve the best price for his client is to use the Best and Final Offers process.
In particular the process can be used when a house requiring renovation is offered for sale. Interest will range from property developers, investors, builders and, of course, traditional home buyers looking to create a family home rather than being focused upon creating a profitable resale. Each of these parties will have a different opinion on the costs required to renovate the property and the time that will take, because of these variables each person will have a different opinion on the price they are prepared to pay.
In this situation the estate agent can expect to receive multiple offers, with each potential buyer offering a different amount and may also be presenting a different ability or speed to proceed to purchase because of their own financial situation particularly if they are reliant on the sale of another property in order to be able to complete their purchase.
The estate agent will be faced with the choice of conducting individual negotiations between the parties to ascertain the best price for his client by giving each potential buyer the opportunity to increase their offer until they outbid the other potential buyers, similar to an auction but unlikely to be conducted simultaneously between all the potential buyers. This scenario is likely to be extremely time consuming and quite difficult to manage at a time when emotions amongst the potential buyers could be running high.
Another option available is 'Sealed Bids' each potential buyer is asked to submit their best offer in a sealed envelope by an agreed date and time. The envelopes are then passed to or opened with the client and the buyer is then determined.
Best and Final offers is a similar process but not quite so formal. A deadline is set for all offers to be submitted. The offers are then collated by the estate agent and submitted to the client for acceptance. The agent will be able to conduct the potential buyers and use this mechanism to achieve the best price for his client in the fairest way between all the interested parties.
What Information Should You Give
The key information is, of course, your offer (this should be the best offer you are prepared to make as you will not have another opportunity to increase upon this figure, you could also think about making the figure an odd number of pounds rather than a round thousand just in case there is a matching bid to yours) You should also include the financial details of your purchase ie cash or mortgage and the deposit If cash you should include copy bank statement or letter to confirm a balance to cover your offer, if a mortgage you should include your Financial Advisors details.. Include information about any associated sale that your purchase will be dependent upon and finally it is a good idea to include your solicitors details – this helps to show how committed you are to the purchase. Some people will also include details of their intentions with the property if their offer were accepted – maybe you want to create a family home or return the property to its former glory – making your proposal that much more personal could be what is required to tip the balance in your favour as not everybody is purely motivated by the monetary value of your offer!
But I Really Want the Property and Will Pay More Than Anyone Else
This is a phrase that can commonly be heard from eager potential buyers, the estate agent will easily resist breaching the trust of the other potential buyers. The process is specifically designed to illicit the best offer from the group and quite simply he will not know the best offer until the deadline for offers has passed. If the eager buyers follow the process guidelines and submit their best offer they will either be successful or the property will be sold at a price in excess of the value they have put on the property and they should not be disappointed to have lost out.
But I Could End Up Paying Too Much
If successful, it's a nagging doubt you may have, but rest assured if you withdraw somebody else will take your place and will buy your dream home. You should always use the services of surveyor and you will have the benefit of his opinion to support your offer – if he does not think the property is worth the price you have offered he will tell you and you will then have to decide if you wish to proceed at the figure you have offered. Remember though, if you try to renegotiate your offer the vendor may decide to offer the property to one of the other potential buyers who you previously outbid.
It remains to wish you good luck if you are involved in submitting a best and final offer and I hope this brief guide has been helpful to you.