We have passionately argued that 'best and final' offers is a lazy way to negotiate for a long time. We think it's a high pressure tactic that is unscrupulous when the stakes are so high.
Unfortunately, this has been the common way agents have handled offers recently. Ask a buyer to make just one offer, and it's 'sorry, we are too busy to negotiate'.
In our experience, buyers universally hate this approach. They worry about paying too much or missing out and not getting another shot. However, it tends to make buyers consider other options, leading to them making offers on multiple properties. Often making 'low-ballers', just in case they got lucky.
In a booming market, you might be fortunate enough to snag a buyer who gets over-invested and pays more than expected. But, in a slow market, it's just plain lose:lose.
It is a reality that in today's climate, buyers are making offers that once would be considered 'low ball'. The agent's job is to push this price up. Not complicated, I know.
Good agents can negotiate. They will build the right level of rapport with a buyer and get to know their motivations. They will understand how timing matters during the negotiations. And how to build the right level of pressure without the buyer feeling it. They will have the ability to read the play, to qualify and have the skill to pull the deal together. Sales is easy in a hot market. But, success in a slow market does take some skill.
Here is an example of what not to do:
- property is on the market for $850,000 - $900,000
- after the first open home, there are three people interested
- agent tells the three buyers "we have got three other people interested. Everyone needs to make their best and final offers by 11 am tomorrow."
- the agent makes sure it's clear to everyone that "it needs to be their absolute best offer as there will be no negotiation and if they miss the property by $1000, they won't be given another chance."
- agent stresses again that they only have one shot. After that, there will be no negotiations!!
- one buyer doesn't like the hard sales tactic and decides to pursue other properties
- another buyer doesn't return phone calls
- the third buyer makes an offer of $800,000
- the fourth buyer was just made up (illegal, but sadly common practice)
- the agent goes to the vendor and presents the offer of $800,000
- the owner says, "but you told me you would get $900,000. I want more"
- agent calls back the one buyer who has made the offer and says they need to increase their offer
- the buyer gets upset that it was their final offer and re-confirms the agents instructions that there were supposed to be no negotiations after the due date.
- the buyer calls out the agent, "obviously, you have no other interest. I am not changing my position."
- it becomes a stalemate, and the property remains unsold
- buyer thinks the agent has no credibility and refuses to take any further calls.
- the buyer goes on to buy a home from another agent that could better handle the situation
- agent attempts to convince the owner that the property is overpriced
- house undersells weeks later, and the owner walks away unhappy with the agent
Agents are paid to negotiate. Good agents will listen to buyers. They will understand where each side is prepared to compromise and hopefully arrive at a price which thrills their vendor but seems fair to buyers.
'Best and final' offers are a blunt instrument, without any skerrick of nuance. We think it is lazy and harmful to both buyers and sellers. It lowers agents' reputation in the community and usually does little to protect the value of people's most valuable asset.
