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Best and Final: the Dreaded Multiple Offer | monrovia homes for sale - monrovia real estate
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Best and Final: the Dreaded Multiple Offer

 

Those who have been paying close attention to how the houses for sale in the San Gabriel Valley have been performing may have experienced the results of the dreaded “multiple offer situation.” When a closing price seems to rise unexpectedly, it could be because of something called the “Notice of Best and Final.” That notice can be issued by a listing agent as soon as more than one offer is on the table. Experienced real estate agents sometimes choose this strategy to win the best price for their client. It instructs all interested buyers to submit their “best and final offer” by a deadline (usually within 24 – 48 hours). Since usually no counters or escalation clauses are allowed, one blogger has aptly called it Multiple Offer Sudden Death. Here’s how it works:  

  • The seller’s asking price is listed at, say, $720,000.
  • Buyer A is interested; bids $710,000.
  • After a few rounds of negotiation, the seller and Buyer A near agreement at $716,000
  • Buyer B, not knowing that the seller is nearing agreement with Buyer A, submits her own bid at $718,000.
  • The seller initiates Notice of Best and Final, giving both parties two days to submit their last offer.
  • Buyer A begrudgingly goes up to the full list price and now offers $720,000.
  • Buyer B shoots all the way up to $729,000 – the offer which is accepted.

In this scenario, Buyer B not only paid $13,000 more than Buyer A was about to pay, but also paid $9,000 more than needed to beat Buyer A’s top price.

Great news for the seller, for sure — but less exciting for the buyers, since what was a great deal just becomes so-so. That’s why I advise my buyer clients to do their best to remain emotionally detached. I suggest deciding on the true value you believe the home is worth, then sticking to it, no matter what!

On the other hand, today’s market is seeing a significant rise in all-cash offers.  Many buyers are losing out on the home of their dreams because they can’t compete in multiple offer situations.  This makes it even more important to put your best foot forward when submitting your first offer as soon as a new listing hits the market that interests you.  Prepare to be frustrated, no matter what price range you’re in.  I have seen even $2,000,000 buyers get overbid in multiple offer situations. 

Regardless, real estate is still one of the best investments you can make. 

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