Tips on making a best and final offer

Question

Me and one other buyer have been asked to make our best and final offers on a house after us both making initial offers.

I believe I am in a good position as stated here and I will reiterate this to the estate agent when I make my offer.

I have read that offering an odd amount such as £100,123 would be better than £100,000 just to outbid anyone else making an offer of £100,000.

Are there any other tips for making a best and final offer other than the two I have already mentioned?

Update: I should have probably mentioned that the estate agent told me the initial offer made by the other party. This offer was around £1500 higher than my initial offer (<1% of the property price higher) so seemed insignificant in the scheme of things but I now think this might be a ploy to scare me into making a ridiculous offer.

Second Update: Further to this the estate agent gave a deadline of approximately 24 hours after I was initially told that a best and final offer was to be made - presumably this is to force me into a rash decision of making the aforementioned ridiculous offer.

Answer 1

Personally I would send back this note:

"Thanks, we have already made an offer. Feel free to come back to us if you have a counter-offer in the future. For now we are persuing other properties.

Note that the situation suggested by the agent/seller is unbelievably bad on your end (and for the other buyer).

1. They are under no obligation, whatsoever

2. They are giving out zero information

It is simply a fishing trip by them.

Be aware that, as soon as both of you put in a "final" offer, let's say 110 and 115. The agent will simply write back to you saying:

Thanks for your offer of 115. At this time 120 could secure the property.

You would be taking part in a borderline scam!

Be aware that "final offer" means nothing, and gives no advantage to you!.

They will simply look at these new offers and then think, "oh these are interesting, I wonder what we can get".

There is no benefit, whatsoever, to you (or the other buyer).

Property negotiations in the UK are gritty; you have to be pretty aggressive / clear thinking.

Important! What does the phrase 'final offer' mean?

In negotiations you often use phrases in English such as

• "It's my best offer!"
• "I swear this is my limit!"
• "I can't go any higher than X!"
• "This would have to be our final offer!"
• "This is a whole-budget offer!"
• "This is a walk-away offer."

All of this is just colorful language. When you say something like "best!", "final!", "highest!" etc, there is no specific meaning.

(There is, utterly no actual legal or accounting meaning. But there is not even any "meaning" in language - it's simply "colorful language".)

Some folks have commented that the Seller may or may not be "honest". Fortunately (so to speak), that is not the issue...

When the Seller says "Send in your final offer!" it's just colorful language meaning:

• "Send in more offers!"

There is no meaning if you add adjectives such as final, last, best, most powerful, decisive, aggressive, high, etc.

• It could be that people not familiar w/ the UK market are thinking of an actual legal mechanisms, perhaps an "auction" or "dutch Auction", "sealed Auction", "tender" or whatever.

This has no connection to any of that.

When the agent happened to say send in more 'final' offers, it is just colorful language, it has no meaning, mechanism, effect - it means literally nothing. It's just like saying enthusiastically "Send in more offers - really good ones! Let's do it!"

That "deadline" thing...

"Further to this the estate agent gave a deadline of approximately 24 hours..."

Just ignore anything an agent says about "deadlines". Do what you want in your own time.

Certainly, at any split second you can lose out on buying a house, for numerous reasons. That works both ways. Any "deadlines" mentioned by anyone are fatuous.

Answer 2

The question comes in how much do you like the house? If you like it, and can see yourself living there for the next 25 years you may consider writing a letter to the owners about how you see yourself living in the home. This would might include raising children, and decorating ideas. There are some cases, that I read about, where lower bids win because of such a letter. This may not work if you are dealing with institutional ownership of the property, but can work if you can make a human connection.

Another thing to play in your favor is the financial position you are in. I would include that with any letter you write. While you won't win against a cash buyer, you may win against someone with 10% down and a slightly higher bid.

In your agent's estimation how serious are they about best and final? You may put in a bid with the understanding that you can go a bit higher. They may come back to you with, "well if you can go 1,888 higher the house is yours".

If this house is not perfect that do not feel obligated to go max price. There will be other homes that come up for sale.

My Update: If you really believe that the agent and seller is being this dishonest you'd probably do best by walking away. However, in general, I would temper my editorial comments. The seller wants two things that can be competing interest. The first is a quick smooth sale, the second as much money as possible. They probably have an eye on their new house and they may also be up against competing offers. If they can get 3K more for their house, then they can up their offer for the new house as well.

This kind of thing is not unheard when housing is in high demand. Currently the low mortgage rates is increasing demand.

Answer 3

If you haven't already, consider making an offer with an escalation clause. Basically, you say, for example: "I'm offering $100,000 and I'm willing to beat any other legitimate offer by $1,000, up to a maximum of $120,000."

Answer 4

The previous answers ignore the way estate agents operate in the UK. Of course this answer assumes the agents are reputable and honest - otherwise all bets are off on what might happen.

First, having appointed an agent, the seller has agreed that ALL communication with potential buyers is carried out through the agent. If a buyer tries to make direct contact, either they will be politely told to to contact the agent, or ignored. It is a high risk strategy for the seller to attempt to go behind the agent's back. The agent may simply terminate the relationship, and will probably warn all other agents in the area not to do business with them, should the seller's private attempt to find a buyer falls through.

Second, the "last and final offer" is normally a legally binding procedure: the seller and the highest offerer are both required to accept this as the basis for the sale, in exactly the same way that the final bid in an auction is legally binding on both parties.

So refusing to submit a final offer is simply walking away from the sale. The agent may assume that the potential buyer doesn't understand the rules of the game and ask whether they really want to resubmit their previous offer, but the agent isn't under any obligation to do that.

The entire purpose of the "last and final offer" is to put an end to a series of offers, counter-offers, re-negotiatons of exactly what is being sold, etc and bring the process to a conclusion. Unless somebody is being dishonest, there is no way to game the process: the highest offer wins, and the selling process is terminated.