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In commercial real estate, a “best and final” offer is a stage in the bidding process where potential buyers are asked to submit their highest and final bid for a property. This usually occurs after initial rounds of bidding, and it signals that the seller is looking to come to a deal and select the most attractive offer. It’s important to note that the best and final process is more common for larger commercial real estate (CRE) sales (i.e., $3M+) while smaller deals tend to be less formal. Here’s a chronological breakdown of what the “best and final” process entails:
- Initial Offers: Buyers submit initial bids for the property and the seller and their broker review these offers. While the price point is the most important point of contention, the terms proposed (earnest money, due diligence period, financing contingency, etc.) make a meaningful difference. After all the initial offers are received, the broker and seller will shortlist which potential buyers had the most competitive bids.
- Request for Best and Final Offers: The broker contacts the shortlisted buyers, inviting them to submit their best and final offers. It’s standard practice for the buyers to be informed that this is their final opportunity to present the highest price and most favorable terms they are willing to offer. A deadline will also be communicated at this point.
- Final Decision: The seller will select the offer that best meets their goals and criteria, which may not always be the highest offer in terms of price. The chosen buyer is notified, and the transaction moves toward contract negotiations and closing.
Note – The definitions of the technical terms in any of our posts can be found in the glossary section of our website.
Communication & Persistence
Clear, concise, and quick communication is one of the ways that you can stand out during the best and final process. At JP Acquisitions (“JP”), we respond to the broker and seller as fast as possible while not sacrificing professionalism. The quick and sufficient responses help indicate to the broker that you’re hungry and eager to win the deal. The quick and professional responses also help alleviate work on the part of the broker because they won’t have to follow up with you (i.e., the buyer). This is the right moment to state that it’s a good rule of thumb in business to make other people’s lives as easy as possible. Strong communication skills are appreciated and make the lives of everyone easier.
I mention persistence in the title of this section because you never know if regularly checking in with the broker and seller will pay off if the deal is to fall through. Remember, just because an offer is accepted by the seller, that doesn’t mean that the deal will close with that buyer. Positioning yourself as a backup buyer by communicating with the broker could mean the difference between closing on a deal or not.
Reputation
Reputation is everything in the commercial real estate world. The reason for this is that there are realistically only a few players that are purchasing large assets that warrant having a best and final process. As such, building a reputation for yourself as a competent individual or company that can close deals (i.e., competency), bid competitively, and be fair makes a huge difference. Being in constant communication with brokers in the market, lenders, and other real estate professionals helps to increase your reputation and what’s critical to remember is that people like to do business with others they know, like, and trust. In addition, having a strong and thought-through marketing strategy helps to increase visibility and reaffirm the strong reputation you should be seeking to build. Realistically, LinkedIn is the main platform you’ll want to be on and publishing content about your team, strategy, and performance is helpful to increasing visibility, winning deals, and scaling.
Conclusion
The combination of communication, persistence, and reputation can significantly enhance your chances of winning the best and final process. Something to bear in mind is that when submitting an offer, you should make sure that the terms work for you. In other words, do not commit to terms if you know that they break the deal and/or you cannot commit to them. At the end of the day, the deal must work for your criteria.
If you have any questions regarding the terms and concepts in this post or previous ones, please reach out to either me (tedi.nati@jpacq.com) or someone on our team so we can help explain further. If you’re interested in investing with us at JP Acquisitions, you can contact us via our contact form, by emailing a member of our team, messaging us on LinkedIn, or signing up for our investor portal to set up a meeting.
As always, I hope you enjoyed reading this post as much as I have writing it. Best of luck!
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About the Author
Tedi Nati is the Managing Partner of JP Acquisitions. In his role he is responsible for broker outreach, establishing deal flow, underwriting, marketing, investor relations, and assisting in the closing process. In addition to his role at JP Acquisitions, he is an Assistant Equity Underwriter at Cinnaire, a non-profit Community Development Financial Institution (CFDI). In his role at Cinnaire, he is responsible for assisting the underwriting team in evaluating and structuring real estate equity investments and assessing the risks and mitigants associated with such. Tedi earned his Bachelor of Science in Finance from DePaul University, where he graduated Summa Cum Laude. In his free time he enjoys reading, looking for multifamily deals, and working out.
Make sure to always do your own research before making any final decisions on buying/investing real estate, stocks, or other securities. I am not a CPA, attorney, insurance, or financial adviser and the information in this blog post shall not be construed as tax, legal, insurance, construction, engineering, health and safety, electrical or financial advice. If stocks or companies are mentioned, I sometimes have an ownership interest in them – DO NOT make buying or selling decisions based on my posts alone. If you need such advice, please contact a qualified CPA, attorney, insurance agent, contractor/electrician/engineer/etc. or financial adviser.
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