Strategy for Best and Final Offers in NYC Real Estate
What are some best and final offer tactics that home buyers can employ in NYC’s heated property market? What best and final offer strategy should home sellers in New York City utilize to maximize their sale price? Learn more in the definitive guide to the house bidding process and house bidding war rules in New York!
What Is a Best and Final Offer in NYC?
A best and final offer is an opportunity for an interested buyer of a NYC property to submit their highest, last and best offer to purchase the property by a certain deadline. A best and final offer is typically requested by the home seller when they have received multiple offers. A seller or the seller’s agent will usually give all interested buyers at least a few days advance notice before the deadline for the best and final offer.
A best and final offer is typically submitted through email, though some listing agents may request that you also email a standard REBNY Submit Offer Form. If you’ve previously submitted an offer, it may be wise to re-submit your entire offer including any attachments such as your REBNY Financial Statement and mortgage pre-approval letter. However, many listing agents will be alright with just a simple email confirming the terms of your full and final offer if they already have your offer documentation.
Best and Final Offer Tactics for Buyers
A great buyer’s agent will gather as much intelligence about the competitive situation as possible in advance of the best and final offer. A seasoned buyer’s broker will call the listing agent and attempt to gather as much information as possible about the seller’s motivations as well as the number of other buyers and offers. However, be warned that anything the seller’s broker says has to be taken with a grain of salt.
There is no way to verify the truth of anything the seller’s broker says, especially when representations are made verbally. A listing that supposedly has “close to 10 offers” could in reality mean 9, 6 or even 3 offers. There are no rules in NYC real estate.
Pro Tip: You’ll want a buyer’s agent who will be able to read the voice tone and body language of the listing agent. Sometimes, a seasoned buyer’s broker will be able to tell when a listing agent is lying.
The buyer and his or her agent will have to pair this information with other, more neutral indications of interest in the property. For example, the buyer can compare the number of people who showed up at the last open house with the number of people who have saved the listing on various property search websites. Perhaps the buyer’s agent can even count the number of people who have signed in at the open house. This will give you an indication of how popular a property truly is. For example, if 200 people saved a particular listing on just one property search website alone, then the listing agent probably isn’t lying when he or she claims there are 5 offers outstanding. If however only 10 people have saved the listing, then you might raise your eyebrows if the listing agent claims that they already have multiple offers.
You can also check the sanity of your full and final offer by looking at the comparable sales (“comps”) in the building and surrounding neighborhood. It’s easy to do so on most property search portals, many of whom pull recorded sale data directly from ACRIS (i.e. public records). The most relevant comps will be units of the same line and floor plan as your target apartment. Other lines that can be equally relevant are ones that have a similar or mirror layout as your target apartment, or even other units that are larger or smaller but have the same number of bedrooms. Before your submit the final offer, do one last sanity check of the neighborhood price per square foot (PPSF) averages. Many real estate search websites such as StreetEasy will have free “generate comp report” tools you can easily use.
Want help? Check out our home pricing guide for FSBO sellers which will be equally useful for buyers about to participate in a best and final offer process.
Best and Final Offer Strategy for Sellers
A best and final offer strategy can be extremely rewarding for home sellers if they’ve priced their home correctly. Better yet, if they’ve slightly under-priced their property, they’re almost certain to get a bidding war on their home. However, if you’ve made the mistake of pricing your home too optimistically, then you run the risk of your listing sitting too long on the market and looking like a bad apple when you have to decrease the price. In this latter situation, you will almost certainly not have a bidding war unless your price reduction is dramatic.
Let’s assume that you’ve priced your home correctly and you have the good fortune of receiving multiple offers. You will have multiple ways to run a house bidding process.
The first strategy is the simplest and cleanest to execute. You will simply let all interested parties know that due to the receipt of multiple offers, you will be calling a best and final and are asking all buyers to submit their last and final offer by a certain time and date. If you really want to keep it clean, you can even have your listing agent mention in the email blast that you will not be giving out information on the state of the process, and request that everyone wait until the best and final offer process has concluded.
After all of the offers have trickled in, you will review each offer with your listing agent and pick the best offer to accept. The best offer won’t necessarily be the offer with the highest price. You will want to consider other factors such as certainty of execution and contingencies. For example, an all cash offer will have a stronger chance of closing versus an offer that requires a mortgage and is contemplating only a 10% down payment. Furthermore, an offer which requires a mortgage but is waiving the mortgage contingency will be similar to an all cash offer and be stronger than an offer that requires a financing contingency.
A second best and final offer strategy that involves more finesse is to announce a best and final process, but to allow buyers and their agents to call you or your listing agent for more color. You can even proactively call bidders before or after the deadline to give them more color on the competitive situation, and egg individual bidders on to improve their offers. How well this is executed depends on the skill and salesmanship of your real estate listing agent in NYC. You’ll want to sound credible when you call bidders to tell them that someone just beat them by $10,000, but you liked them so much that you wanted to give them an opportunity to improve their offer.
Pro Tip: You can theoretically hold a best and final even if you only have one offer. Due to the asymmetry of information, your single bidder has no idea whether there are multiple bidders or not. While some sellers may view this strategy as unethical and perhaps rightfully so, there are no rules preventing a strategy like this which may get the single bidder to improve on himself.
Real Estate Bidding War Rules in NYC
The first rule for bidding wars in NYC is that there are no house bidding war rules in NYC. In this respect, New York City’s real estate market is truly the Wild West. Remember that real estate offers are not binding in NYC whether they were made verbally or in writing. That means all of this best and final offer nonsense ultimately just provides information to the seller, but does not bind the seller in any way to have to sell the property.
To reiterate, while we can provide bid war tips in this article, there are no hard and fast house bidding war rules in NYC. That means as a buyer that you don’t need to participate or do anything if you don’t wish to.
You can either pass and say you’re no longer interested, or stay firm and simply tell the listing agent that your original offer is the final offer.
Or you can participate as much as you’d like in the best and final offer process. You can submit a best and final offer and wait like a good boy or girl until the listing agent reaches out and tells you the outcome, or you could submit an offer and immediately call the listing agent for more color. You can re-submit a higher offer before the best and final offer process has concluded, or you can re-submit a higher offer after the best and final offer process has concluded and you’ve been told that you didn’t win.
Bid War Tip: Since offers aren’t binding anyway, the deadline can be somewhat of joke if you intend to come in over the top and blow the other offers out of the water.
Best and Final Offer Template
Dear buyers and other interested parties,
Thank you for your interest in our apartment for sale. We sincerely appreciate your interest and your offers. Due to the level of interest and the offers we’ve received from multiple bidders, we’d like to invite everyone to submit their best and final offers by 5pm this Friday. Please allow us up to 48 hours after the deadline to fully evaluate all offers before we announce the results.
We will be hosting an open house this Thursday from 5pm to 7pm for anyone who would like to stop by for one last visit.
To keep the process fair, we will not be providing any information on the competitive situation prior to the conclusion of the best and final process.
We will be honoring the results and will not accept any revised bids after the deadline, so please put your best foot forward!
Best of luck,
Best and Final Offer Sample Letter
We thought you might have recognized how much we love this home by the times we’ve written to you and revised our offers. It feels like the longest week we have experienced. We just realized the day we placed the initial offer was the exact same day Ziggy proposed to me last year. It just made us emotionally connected to the apartment and believe it is special for us.
We got aware that you family recently had a little one (huge congrats!) and I can almost foresee us following the same path, to continue adding a loving story of our own in your place. Thus, we are willing to stretch ourselves to the utmost to reach $1,963,000 with 30% down, without any financing contingency. Ziggy and I would cherish the opportunity to continue caring for the house with great love and affection if given the chance.
Laurie and Ziggy
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Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).