An Estate Agents guide to “best and final offers”

A by-product of a surging market with increased demand and limited supply is competition. Most housing sectors in the South West are experiencing considerable interest from the day they are marketed, sometimes resulting in multiple offers at or around the asking price. This property hungry environment can often lead to a sought-after property being put to “best and final offers”. 

So, what do I need to know about this and how can I increase my chances of success?

Why do properties go to “best and final” offers?

When presented with multiple offers, this is often the cleanest and simplest way for a seller to choose the most appropriate buyer at the right price. All buyers say that they “don’t want to get involved in a bidding war”, this is the alternative and avoids the back and forth of offers, often in small increasing increments. From a seller’s perspective, this gives all interested parties time to put together their best offer, and then similarly gives the seller time to carefully consider all the offers after the closing date, before making a final decision. Ultimately, each house can only sell to one buyer and the seller has to make a choice somehow. If there is only one offer on a particular house, or a clear leading bid, there is no need for best and final offers so this whole process is only ever driven by buyer demand.

Isn’t it just a way to “bump up the price”?

No, offers are considered on many factors and it is rarely all about the price. The “best” offer is not always the highest offer. Sure, the final selling price may be above the asking price, but this is all down to what an individual is prepared to pay for a certain house and their circumstances. More than anything, it is a clear and transparent way for a seller to choose the most appropriate buyer from what can be many similar offers.

So, how does it work?

If you have made an offer on a property and the agent informs you that the property is going to best and final offers as a result of the interest, you will normally be sent an email outlining the process, which may very slightly agent to agent but will essentially be along the same lines. This email will be sent to all interested parties and it will outline how you make a bid, when you have to submit your bid by and what you will need to include in the way of supporting documentation. Normally, you would have between 2 and 5 working days to present your offer but be warned that there will be a closing date and time by which you must present your offer for it to be considered. You don’t have to increase your offer if you don’t want to, but you do have to put forward your “best and final” fixed sum bid (which can be more than your original offer and can exceed the asking price if you wish). A “fixed sum” means that you will not be allowed to offer for example “£1,000 more than the next highest bid” or any other ploy to gain advantage, just a simple fixed sum. Most people tend to add a few pounds to their offer in case there are two offers submitted that are exactly the same, but in reality, this practice would never really make a significant difference to a seller. You will submit your offer in writing, the agent will confirm receipt and then you simply wait for the vendor to make a decision, at which point you will be informed whether or not you have been successful with your bid.

Do I have to take part?

No, if you don’t want to make an offer on this basis, you do not have to. Bear in mind though that you stand little chance of buying the house if you do not take part, even at your original offer price. It costs nothing to submit a bid.

What information will be asked for?

This will vary slightly from agent to agent, but will almost certainly include the following:

1.     Your fixed sum offer price.

2.     Your financial position with supporting documentation (proof of funds, mortgage certificate etc.)

3.     Your position in terms of timescale, and if there are any related sales.

In addition to this information, some agents (including ourselves) will ask for any other information that you consider pertinent, or that you would like to let the seller know before they decide. This can be a useful addition to help “sell” yourself to the owner of the property. You might be a local buyer looking for a family home, always wanted to live in this road, children at school close-by, for example. This is a good opportunity to personalise your position, which may well be taken into consideration. If there is anything you don’t understand, always ask the agent before submitting a bid.

How do I best present myself?

Provide as much information as possible, be honest with your submission and put forward your very best bid! If you put your best bid in and are not successful, at least you can then say that you tried your best. Make sure your bid is in in good time and always ask for confirmation of receipt from the agent. If you have a related sale, make this clear and include all the information you have about your buyer, the chain and the selling agent so that the chain can be investigated and confirmed properly.

What obligations does the agent have?

Estate Agents are legally obliged to submit each and every offer to a vendor, so you can rest assured that your bid will be submitted for consideration. Whilst the agent will provide professional advice to the seller based on the offers received, the ultimate decision alwaysrests with the seller. 

What happens after closing?

As soon as possible after all the offers are in, the agent will submit each and every offer to the seller for their consideration. If offers come in after the deadline, these will still have to be technically submitted to the vendor (for legal compliance) but will most probably be ignored as being out of time. The seller will make a decision based on the position of the people making offers, along with the offers themselves and inform the agent of their decision. This can take 1-2 days in some circumstances but is normally dealt with much quicker. You will be informed whether your bid has been successful, but you will not be given any further opportunity to improve on your bid. The successful bidder will then proceed with the purchase in the normal manner, subject to contract and is not legally committed until they exchange contracts as normal.

Will I be told the sale price if I am not successful?

It is highly unlikely that you will be told about any other offers during, or after, the process. The seller and the agent will almost certainly exercise their right not to disclose the identity of the successful buyer, or the eventual sale price. 

What happens if I am not successful, but the sale subsequently falls through?

In this instance, most agents will immediately contact all the other applicants that submitted a bid and see if they are still interested. This can sometimes result in another round of offers, but mostly would just involve a new sale to one of the original bidders.

If you do find yourself in this position, I hope this short guide helps you along the way. Remember, whilst the selling agent does act for the vendor, they are not your enemy - if you need advice, just ask. 

Our team are always on hand to answer any property related queries, even if it is not about a house we are selling, so if you want any third-party impartial advice, do give us a call!

Bradley Start FNAEA CertREA

Partner, Start & Co