“Best and final offers” – What does it mean at PDQ?
When there is strong interest on a property and a number of offers are received in quick succession, at PDQ (as at many other agents), we often advise the owners to use a process called ‘best and final’ offers to decide which potential buyers offer to accept; effectively a blind auction. We have found is the fairest and least pressured way to agree a sale because everyone is bidding equally. We also find it helps prevent gazumping.
Experience and evidence shows this ensures the best price is obtained for our customers, unlike the alternative ‘open-bid’ system used by some agents which often results in a lower sale price and bad feelings
For example, a bidder who has been told the other bidder has offered, say, £500,000, may only offer £501,000 despite being prepared to go much higher to secure the property. When bidding blind, all interested parties reasonably expect the other bidders to value the property as highly as they do and, to be able to afford to bid to that level. Consequently, bidders will offer their genuinely best price rather than the lowest price they believe they can get away with.
Note: If you are a buyer reading this, all agents have a legal and contractual obligation to negotiate the best price for their customer, the seller.
At PDQ, we ensure that all offers remain confidential to us, the person who has offered and the owner I.e. no-one else who has offered is given the level or substance of any other persons offer unless instructed to do so by the owner.
Once initial offers have been received and the owner has agreed to the best and final process, we ask everyone who has offered for their ‘best and final’ offer. At this point, we also explain that no-one is under any obligation or pressure to increase however, we inform that everyone else who has offered also this opportunity and, if they wish to make a higher offer, this is the time to make it.
Once we have all of the best and final offers, we put them to the owner along with every buyers position and any proof we have of that position* (buying with a mortgage, cash, subject to the sale of another property, and any chain details we have been able to confirm). The owner then makes a decision and the successful bidder is informed.
NB – Under English law; any offer received by an estate agent must be passed on to an owner (and confirmed in writing) up to the point of exchange of contracts unless, the agent has a written letter from the owner instructing them not to consider further offers. So, whilst best and final offers may have been agreed, offers must still be put forward by all agents. However, at PDQ, we generally advise owners to honour agreements made under best and final unless there are very good reasons to change buyers (often known as gazumping) such as the buyers position has changed from cash, to requiring to sell a property before being able to purchase.
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*Agents have an obligation under Property Ombudsman rules to make reasonable attempts to ascertain the ability of a buyer to fund the purchase. However, it is illegal for an agent to insist you use their financial advisor or, to state or imply that an offer will not be put forward or, may be less favourably considered, if a buyer refuses to use an agents preferred supplier.