Sellers in a competitive market are likely to get multiple offers. These offers benefit their sales because they may enable them to obtain a better price. But it takes a lot of time. The seller must compare all the bids before trying to bargain with each prospective buyer separately if there are many offers.
The sellers must counter offer, wait, and maybe receive a counter offer from the buyer to accomplish this. They will have to repeat that several times. The seller and their agent might choose a simpler route at this time. You can request the “Highest and Best offer“. You and your realtor must act promptly because this typically has a deadline.
When a seller says anything like this, they tell potential buyers they have several solid offers. And the seller wants to shorten the procedure rather than haggle with every buyer. There will be no haggling or counteroffers; they merely want your best offer.
Following the expiration of the time they set, they will assess each offer and decide. You only have this final opportunity to submit the best offer if you truly want that house.
Process of Highest and Best offer
- With the aid of a listing agent, the seller places the house on the market with an asking price (of $700,000).
- Three offers are made to the vendor, but none stand out. Agent reveals scenarios with several offers and advises choosing the highest, best, and last offer method.
- The brightest offers from buyers are presented, such as buyer A’s $710,000, buyer B’s $720,000, and buyer C’s $730,000.
- The realtor notifies the other buyers that the seller has picked buyer C, who received the highest bid. The buyer begins inspecting the home before continuing, and the buyer and seller move forward with the contract.
- If the contract with the present buyer falls through, the remaining proposals become “backup offers.”
Why go for the “Highest and Best offer” strategy?
Asking for the highest and best offer when there are multiple competing offers might benefit the seller in several ways.
Most vendors would sell now rather than wait till later. A seller can avoid the back and forth of negotiation if they decide to request the highest, best, and final bids from all potential purchasers. Your timetable will be delayed by 24-48 hours for each round of offers and counteroffers.
Encourage the buyer to submit a higher offer.
As it demonstrates genuine interest in the property, asking for the highest and best offer may encourage the buyer to pay more than your desired sales price. In talks, purchasers often won’t start with their greatest offer to leave some opportunity for bargaining. However, requesting the “best” offer results in better terms for the seller more quickly.
How to bring the “Highest and Best Offer”?
You must make every effort to get your offer the most alluring to the seller if you’ve decided you want to submit the winning one. Here are some tactics for winning scenarios involving the highest and best offers.
Offer to pay more
You must succeed even if your bid isn’t the highest, depending on the rest of your offer. Even if all the other bids appear perfect, a bid will have difficulty getting accepted.
Ensure that your funding is in line by obtaining a pre-approval mortgage. The seller won’t wait to see if you can get a mortgage approval if they’ve already received many bids.
The sellers prefer a buyer with their finances to ensure that the deal won’t go through for financial reasons. Your offer will benefit if your financing is ready to go.
Pay in Cash
It’s a major advantage for you if you accept cash payments, as not every buyer has the means to do so. Accepting a cash offer makes the seller certain that the sale won’t fall through at the last minute for financial reasons.
Additionally, you don’t have to wait for the paperwork to be done and the mortgage to be authorized when you make a cash offer. To close more rapidly, should the seller prefer it.
Contract contingencies give you the right to cancel the deal if certain conditions aren’t met. You might even be entitled to a refund of your earnest money deposit, depending on how they are written.
Contingencies hurt sellers since they have to worry that the deal will not go through. You have a better chance of submitting the “highest and best offer” if you include fewer conditions in your offer. The most typical contingencies include Home Inspection Contingency, Appraisal Contingency, Financing Contingency, and Home Sale Contingency.
Add a Clause for Escalation
The sellers prefer a buyer with their finances to ensure that the deal won’t go through for financial reasons. An escalation clause offers to exceed the highest bid by a specific dollar amount up to a predetermined maximum price.
Consult an Expert realtor
The secret to success with the “highest and best offer” is your real estate agent. They can assist you in determining what you want to provide financially and in other ways. You may create a compelling offer with the seller by working together.
List on the MLS
The greatest strategy to increase your cash offer is to list on MLS, which syndicates to other real estates websites like Zillow, Redfin, Trulia, and Realtor.com.
You can compare the best offers made by prospective purchasers and get multiple offers. By selecting a flat fee MLS platform or low commission real estate agent, there is a chance to haggle over the sale price, closing costs, etc., and save significantly on commissions. You can compare agents in your region and check various realtors and Houzeo reviews, commission rates, and recent sales.
Be flexible with the deadline.
In that case, your offer may move to the top of the list. If the seller needs to sell their property quickly, they could want that.
Alternatively, they could want to postpone finishing a work or school project for a little while. Your offer will appeal more if you are more eager to work in their schedule.
When you construct your best offer in a competitive market but still miss out, losing motivation is simple. Recognize that if there is another home that you like just as much, you will make the best offer.
Throughout the home-buying process, keep your cool and attempt to distance yourself from any negative feelings.