What is a Best and Final Offer (BAFO)?

Key Takeaways:

• A best and final offer (BAFO) is a buyer’s last chance to make the strongest bid before the seller decides.
• Sellers usually ask for BAFOs when multiple buyers are interested and want to simplify negotiations.
• Buyers should know their budget, stay flexible where they can, and avoid overextending themselves.
• BAFOs aren’t just for homes, they’re common in auctions, business deals, and contract negotiations.

If you’re selling or buying a home in a competitive market, you might hear the term best and final offer (BAFO) thrown around. But what does it actually mean—and how should you handle it? In this guide, we’ll break down everything you need to know about BAFOs so you’re ready when it counts.

What is a best and final offer?

Here’s the quick answer: A best and final offer is exactly what it sounds like: your last chance to make the strongest possible bid before the seller chooses an offer. It typically comes into play in multiple-offer situations, where several buyers are interested in the same property.

Think of it like the final round of a game: everyone submits their most appealing offer, and then the seller picks the one they like best.

>>Read: 5 Ways to Win a Real Estate Bidding War without the Highest Bid

How does it differ from other offers

Unlike an initial offer, which may leave room for negotiation, a best and final offer is meant to reflect the maximum price and best terms you’re willing to offer—including contingencies, closing timeline, and financing details. It tells the seller, “This is my top offer, and I won’t go higher.” 

Here’s a breakdown:

• Initial offer: The first bid a buyer submits, often leaving room to negotiate.
• Counteroffer: A revised offer made by the seller or buyer in response to the other party’s terms.
• Best and final offer: The final opportunity for buyers to strengthen their offer—used when the seller wants to choose the most attractive option without further back-and-forth.

What’s included in a best and final offer?

It’s not just about the highest price, it’s about presenting the most compelling overall package to the seller and an opportunity to show that you’re serious, qualified, and easy to work with. A best and final offer can include:

• • Your offer price: Your strongest bid, with little or no room for negotiation.
  • Earnest money deposit: A higher deposit signals serious intent and financial stability.
  • Contingencies: Fewer or shorter contingencies (e.g. inspection, financing) make your offer more appealing.
  • Inspection terms: Flexibility or waiving the inspection entirely can reduce friction—but know the risks.
  • Closing timeline: Aligning with the seller’s preferred timeline—or offering a rent-back—can give you an edge.

A best and final offer is your opportunity to show that you’re serious, qualified, and easy to work with.

When do sellers ask for a best and final offer?

Imagine a seller puts their home on the market and gets five offers all at once. Instead of going back and forth with each buyer, they ask everyone to submit their best and final offer by a set deadline. That way, they get the strongest offers upfront—no endless negotiations.

This is common in hot real estate markets, like San Francisco, CA, or Denver, CO, where multiple buyers are competing for the same home. It’s a way for sellers to cut through the noise and quickly choose the best deal.

How buyers can make a strong BAFO

In competitive situations, sellers are often looking for a balance of price, certainty, and speed. Here’s how to approach a best and final offer:

• • Know your budget: Decide what you can realistically afford before making your final offer.
  • Get pre-approved: A pre-approval shows the seller you’re financially ready and serious—it’s stronger than a pre-qualification.
  • Tailor your terms: Can you close quickly or be flexible on the closing date? Are you comfortable reducing or waiving contingencies? These things can matter just as much as price.
  • Don’t overextend: It’s easy to get caught up in competition, but stick to what makes sense financially.
  • Lean on your agent: Your real estate agent can guide you in making a smart, competitive offer.

Pro tip: An escalation clause lets you automatically top competing bids up to your limit. Also, offering an uncommon amount—like $470,427—can make your offer stand out to sellers.

Considerations for sellers

Before starting a best and final offer process, determine if it’s necessary—especially in softer markets where it may discourage buyers and cause them to withdraw strong offers.

Use your agent’s advice to fairly evaluate the offers you’ve received. While it’s natural to want the highest price, buyers who’ve already made fair offers might walk away if the terms aren’t reasonable. 

When reviewing final offers, consider:

• The buyer’s financial strength by reviewing pre-approval letters, lending documents, or tax returns.
• The buyer’s ability to close at the agreed price.
• The risk of financing falling through despite an attractive offer price.

Bottom line

A best and final offer can feel a little intimidating, especially if you’ve never done it before. But with a clear budget, strong terms, and a good agent by your side, you’ll be in a solid position to compete. At the end of the day, it’s about putting your best foot forward and making an offer you feel good about. And who knows, your dream home might just be one great offer away.

Best and final offer FAQs

Can a buyer walk away after submitting a best and final offer?

Yes, a buyer can still walk away—especially if nothing’s been signed yet. A best and final offer (BAFO) is serious, but it’s not legally binding on its own. Just keep in mind that backing out after submitting one (or after it’s accepted) might hurt your reputation or have financial consequences, especially if you’ve put down earnest money.

Are BAFO’s negotiable?

Not usually. The point of a best and final offer is to eliminate back-and-forth negotiations. It’s meant to reflect your highest price and best terms. Once submitted, buyers typically don’t get another chance to revise it—so make sure it’s your strongest bid upfront.

Does a seller have to accept a best and final offer?

No. A seller is under no obligation to accept any BAFO, even if it’s the highest. They can reject all offers, choose one that aligns best with their needs (not just the price), or even decide not to sell.

How do you win a BAFO?

Winning comes down to making a strong, well-rounded offer. That means:

• Knowing your max budget and sticking to it.
• Offering clean terms—like fewer contingencies or a flexible closing date.
• Showing you’re serious with a solid earnest money deposit.
• Getting pre-approved so the seller knows you’re financially ready.
• Maybe even using an escalation clause or offering a slightly odd number to stand out.

Also, lean on your real estate agent—they know what makes an offer shine in a competitive market.