What Is Best and Final in Commercial Real Estate?
Best and final is the second round of competitive bidding for a commercial real estate property. After the initial call for offers, the seller selects 2 to 4 top bidders and invites them to submit their highest price and strongest terms. It is the last chance to win the deal, and what you offer beyond price often determines the outcome.
How Does Best and Final Differ from the Initial Call for Offers?
The initial call for offers is a wide net. The broker invites all interested buyers (sometimes 10 to 30 or more) to submit LOIs. Best and final narrows the field to the serious contenders who have already demonstrated interest, underwriting capability, and a realistic price range.
| Dimension | Call for Offers (Round 1) | Best and Final (Round 2) |
|---|---|---|
| Number of Bidders | 10 to 30+ | 2 to 4 |
| Response Window | 10 to 21 days | 3 to 7 days |
| Price Specificity | Range or initial offer | Final, specific number |
| Terms Detail | LOI-level (general structure) | Near-PSA specificity |
| Earnest Money | Standard (1%) | Often increased, may go hard sooner |
| Expected from Buyer | Interest and high-level terms | Proof of funds, financing details, track record |
What Sellers Look for Beyond Price
At the best and final stage, price matters, but it is not the only variable. Sellers are evaluating the total risk of each offer. The highest price is worthless if the buyer cannot close, retrades during due diligence, or needs 90 days of financing contingencies.
The Certainty Checklist
- Hard earnest money: Non-refundable deposits that go hard at PSA execution or shortly after. This is the strongest signal of conviction.
- Proof of funds: Bank statements, commitment letters, or equity partner confirmations showing the buyer can fund the deal without contingencies.
- Compressed DD period: Offering 21 days instead of 45 shows the buyer has already done significant pre-diligence and is confident in their underwriting.
- Track record: A summary of 3 to 5 similar transactions closed in the past 12 to 24 months. This proves execution capability.
- Clean PSA markup: Submitting a purchase agreement with minimal modifications signals professionalism and reduces legal negotiation time.
- No retrade reputation: Brokers check references. A history of closing at or near your bid price is one of the strongest competitive advantages.
NAIOP research on institutional transaction processes confirms that certainty of close is the most frequently cited non-price factor in seller decision-making. A buyer offering 3% less but with hard money, no financing contingency, and a 21-day DD period routinely beats the highest bidder with soft deposits and a 60-day timeline.
How to Win Best and Final
Winning best and final starts long before you receive the invitation. The work you did during the first round, from your initial screening to your underwriting model to your broker communication, all compounds at this stage.
- Refine, do not restart: Your underwriting model from round one should be refined with any new data from tours or Q&A, not rebuilt from scratch. The 3 to 7 day window does not allow for a fresh start.
- Call the broker before submitting: A direct conversation about what the seller values most (speed, certainty, price) lets you tailor your offer. Not every seller prioritizes the same thing.
- Show your work: Include a brief summary of how you arrived at your price. Sellers trust offers backed by clear underwriting logic over round numbers that feel arbitrary.
- Remove contingencies where possible: Every contingency you eliminate reduces seller risk. If you can waive financing, shorten DD, or increase hard money, do it.
- Be responsive: Return calls, answer questions quickly, and make the broker's job easy. The broker is your advocate with the seller, and they champion the buyers who are easiest to work with.
Why Speed Matters in Best and Final
With a 3 to 7 day response window, the teams that already have their underwriting model built from round one are at a significant advantage. They can focus the compressed timeline on refining assumptions and sharpening terms rather than extracting data from the OM and building a model from scratch.
Teams that used the first round to build a complete underwriting model with data traced back to source documents can iterate on price sensitivity scenarios in hours. Teams still pulling numbers from the OM will struggle to submit a thoughtful, defensible offer in the compressed window.
JLL's research on CRE capital markets notes that the average time from best and final invitation to submission has shortened over the past five years, with some markets now expecting responses within 48 hours on highly competitive deals.
What Happens After Best and Final?
After reviewing best and final submissions, the seller selects a winning bidder and enters PSA negotiations. This phase typically takes 5 to 15 business days as attorneys finalize the purchase agreement.
The runner-up bidder is often kept on standby as a backup buyer. If the winning bidder fails to execute the PSA, raises unreasonable objections, or withdraws, the seller can pivot to the backup without restarting the entire process. Being the strong runner-up is not a loss: it keeps you in position if the primary deal falls through.
Once the PSA is executed, the due diligence period begins. This is where the buyer verifies every assumption from their underwriting model against actual property conditions. If material issues surface, a retrade may occur, but the expectation at best and final is that the buyer's price will hold absent genuinely new information.
Common Best and Final Mistakes
The most common mistake at best and final is assuming price alone determines the winner. Beyond that, buyers frequently make the following errors.
- Bidding beyond your underwriting: Offering more than your model supports creates retrade pressure during DD. Sellers and brokers know this.
- Submitting late: In a 5-day window, submitting on day 5 signals disorganization. Early submission gives the broker time to advocate for your offer.
- Ignoring broker feedback: If the broker tells you what the seller needs (speed, certainty, flexible closing date), and your offer ignores it, you will not win regardless of price.
- Not including a track record: At this stage, the seller wants proof you can close. Omitting your transaction history raises unnecessary questions.
Anatomy of a Winning Best and Final Submission
A winning best and final submission tells a clear story: here is our price, here is why we can close, and here is proof that we have done this before. Structure your submission to make the broker's job easy when presenting to the seller.
Submission Package Contents
- Updated LOI: Final price, earnest money amount and structure, DD period, closing timeline, and any remaining contingencies.
- Proof of funds: Bank statements, equity commitment letters, or LP capital call documentation showing you can fund the equity.
- Financing pre-approval: Lender term sheet or pre-qualification letter showing debt is arranged and terms are locked.
- Transaction track record: One-page summary of 3 to 5 comparable deals closed, including property type, size, price, and closing date.
- References: Contact information for 2 to 3 brokers or sellers from recent transactions who can vouch for your closing reliability.
- Underwriting summary: One-page overview of your assumptions showing how you arrived at your price. This demonstrates discipline and reduces retrade fear.
When Best and Final Gets Skipped
Not every deal goes to best and final. If one first-round offer clearly dominates on price and terms, the seller may skip the second round and go straight to PSA negotiation with that buyer. This typically happens when the leading offer is materially above the next closest bid (5% or more on price) with comparable or stronger terms.
Sellers also skip best and final when deal certainty is the primary concern. A buyer who submits a clean, aggressive first-round offer with hard earnest money and a compressed timeline may be awarded the deal immediately to avoid the risk of losing them to another opportunity during a drawn-out second round.