DEFINITION of Best and Final Offer
A best and final offer in real estate is a prospective buyer's last and highest offer. A best and final offer is typically submitted in response to a bidding war. A seller who has received several offers will ask either all bidders or the top bidders to submit their best and final offers. This type of offer presents the most favorable terms the buyer is willing to offer the seller for the purchase of the property. In some multiple-offer situations, the seller will request that potential buyers submit only one offer that is their best and final offer.
A best and final offer in terms of government contracting is a vendor's response to a contracting officer's request that vendors submit their last and most attractive bids to secure a contract for a particular project. Best and final offers are submitted during the final round of negotiations.
BREAKING DOWN Best and Final Offer
In government contracting, a company's best and final offer will be its lowest-priced offer with the most favorable terms. Government entities are frequently mandated to choose vendors and suppliers who offer the lowest possible prices for the requested services and products. The procurement process might weigh other aspects such as the reliability and capabilities of the vendor in addition to the final offer price.
How Best and Final Offers Are Used in Real Estate
Prospective buyers bidding in real estate might do more than increase the potential purchase price with their best and final offer. They might also shorten or lengthen the time to close, ask for fewer seller concessions and/or waive contingencies for a home inspection or financing approval. Buyers will make these changes in an attempt to be the most competitive bidder and get the home under contract.
If the seller of the property is not satisfied with any of the bids after asking for best and final offers, they might choose one of the prospective buyers to negotiate terms for a price closer to the target they were aiming for when they put the property up for sale. In some cases, sellers have told one bidder that they have accepted their best and final offer only to see other bidders further increase their bids even more in an attempt to get the property.
It is possible that the buyer who gave a winning best and final offer withdraws his or her bid. This may be because of new information that became available about the property. There may have been questions about the bidding process including whether or not there actually were other bidders driving up the price.