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What does "Final and Best" mean?

If you have been looking at foreclosures recently you may
have encountered this situation and been asked to fill out
yet another form.

One of the newer forms I am seeing recently is
a “Multiple Offer Disclosure Form”. This form is being
used by many real estate brokers to notify potential
buyers that the home they are interested in purchasing
has more than one offer turned in, and also will at times have a spot on the form for you to write your “best and final” offer.

When you are bidding on a foreclosed upon home you are dealing with the bank owner and quite possibly an asset manager. They have no emotional ties whatsoever with the home and are looking at all offers.
Many times they will continue to receive the offers before making a decision on any of
the previous offers. It is not a “First - come first serve” decision process.

If you are given a Multiple Offer Disclosure Form you are being put on notice formally
that there is more than one offer that the bank has in its system and you have a chance
to give them your final offer.

Give it your best shot. Know what your upper limit is in regards to that particular house
and give them your final offer. More often than not you will not be given a second chance
as the bank will accept one of the offers after the period is over with.

There are exceptions to this: If the bank didn’t like any of the offers they received
they can and sometimes will come back with a counter offer to all parties involved.

Whew! Is buying a foreclosed upon home worth all the extra steps and delays? Only
you can be the judge of your patience level. As always, have a professional real estate
agent in your corner to help you navigate this process.

Kris Wales RE/MAX Advantage 1, Inc. Macomb County MI

Contact Kris Wales - A partner for your real estate needs in Macomb County MI

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Posted by Kris Wales - Macomb County MI real estate blog & homes for sale search site on 04/12/2008 06:35 AM

Comments (25)

foreclosures, macomb county

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25 Comments on What does "Final and Best" mean?

APR

2008

Hi Kris - great advice in this post. Buyers do need to know what all that means, and that there are many extra steps in buying foreclosure properties, especially with some banks. I've been involved in several multiple offer situations on bank-owned properties, and it can be quite nerve-wracking for the parties involved.

Ann

Sometimes I think Asset Managers and REO managers learned a new term "Final and Best"and abuse it like a child who learned a new word. I just don't like foreclosures.

Ann: I've been seeing this form much more recently lately and because of this I'm going to start informing my buyer clients that we may encounter this so they're not surprised. It can be nerve wracking for sure!

Gary: I had the feeling before that you didn't like working with foreclosures :-) They're certainly not a quick transaction by any means. For buyers though they can be more than worth the extra time and patience. If they're willing to stick with me and have patience, I'll work my tushie off for them.

I hear "final and best" in retail negotiations, too.

To me, it means, no regrets if you don't get the home. You gave it your best shot.

Good post, Kris.

Buyers need to have NO illusions that the banks will work efficiently or openly in the process.

More paperwork...Just what we need!

I have never encoutered this "Final and Best" yet. But thanks for the heads up!

Thats a new one on me but probably a great idea. I would really hate to see banks get their hands any further into Real Estate because its all about people and how they feel about the purchase and banks have zero emotion, care and concern for people.

Mike:   I've heard a version of that in retail transactions (Buyer will say 'notify them that is the final and best offer..)   You're absolutely correct in that the banks will not work openly or quickly.

Chip:   I was overjoyed, weren't you? ::sarcasm::   I suppose though that the formal notice is helpful though. At least everyone is on the same playing field.

Kevin:   You're welcome.

Sarah:   The accountants/processors behind the scenes only care about how the numbers crunch. Nothing else. I also do not want to see banks become more involved in the real estate industry for the same reasons you cited.

We use it any time there are multiple offers on the table. Basically putting the buyer on notice that if this is the property you want please give us your best offer as we will not be countering and will accept one offer. But back in the day we used esclatory clauses like they were going out of style. I try to liken things to ebay and then most people understand it better.

Heather: This is something recent I'm seeing up here, it's always interesting to note the practices in our areas. Thanks! I also like your ebay analogy and if you don't mind I would like to use it myself.

Maybe we are all auctioneers at heart!

Donna: I'm not an auctioneer. No way. The banks may be, but I will still continue to do what I do and enjoy.

Kris...I have come accross this form on a foreclosure and the bank still kept countering our offer even after we got the form. We ended up higher than the original highest and best but my buyers wanted the house and they got it!

Debra: That's why I put the "There are exceptions..." at the bottom :-) I encountered this yesterday. Final and Best was asked for, complied with and the bank came back yesterday and countered. I guess they didn't like any of the offers well enough to accept one.

I like this form, it would be so helpful to all the buyers, to give their best offer.

Missy: If I know my buyers are the only interested party I don't mind one bit if they want to come in lower, give it a chance and see where the cards fall. Sometimes the seller/bank will accept that first offer without countering. That makes for some happy buyers when that happens. Otherwise, if there are multiple offers I certainly want my clients to know that and yes, the form is one more way to make sure that notification to all is given.

I've always advise my clients that foreclosures are in another world.... I explain how the banks and asset managers operate. I will call the listing agent to see if other offers are on the tale. If there are, I advise my client to offer their "highest and best", meaning the top dollar that they would want to spend on the house in question.

Kris, I am reminded of a few years back when we had multiple offers on almost every offer. You sound like you have a good handle on Foreclosures and are representing and counseloing your buyers very well!

Kris, Buying ANY real estate right now mean getting a qualified Realtor for help and it seems expecially true with foreclosed homes. Interesting facts that I wasn't aware of, thank you for the post.

There is only one approach with these types...give it your real best offer. To do less is really wasting every one's time.

APR

2008

I have lost a deal in the best and final offer stage only to have the bank come back and give it to us because the deal fell apart.

Kris I've done "final & best" but not in the form of a formal written disclosure. It makes it hard to really negotiate.

Nancy: You're doing all the right things in my opinion. Thanks Nancy. It's so important that we explain the differences in negotiating offers when working with these transactions.

Diane: I remember those days also :-) But at least we had sellers on one side that were in the homes and we would get an answer for our clients quickly! I miss those days... Thanks Diane.

Carole: You're welcome. There are so many twists and turns and new education each day. Amazing, but I do so love it.

Gary: As I said to Missy, I don't mind if my buyer clients want to start the process lower than their "top" offer if we are the only ones bidding. If not, treat it always as best and last. Good point.

Russ: Funny how that works isn't it? There are 2 I'm keeping my eyes on now to see if they make it to closing. Who knows, my buyers may have another shot at them.

Nannette: That's the crux of these bank owned homes, there usually is no negotiating.

MAY

2008

Great post Kris. I have a highest and best due tomorrow by end of business day. My buyers were aware going in that this would likely happen. So, at least I HOPE I educated them! We'll see what happens! I've told them in my best "mommy" voice that we need to use our patieince:)

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