That is one strategy you can use to get great deals. Coming up with crazy gimmicks! It’s basically warning potential buyers that the property is going to go under contract very soon and that they might miss out if they don’t submit the best possible offer. This is yet the best time to sell. It is most banks policies that as soon as they receive more than one offer they will go to highest and best unless the home is under contract. Get free, objective, performance-based recommendations for top real estate agents in your area. Aug 31, 2016 - It can be frustrating buying a house in a hot market when the seller receives multiple offers. Many traditional sellers (not banks) using highest and best as well. It is tricky to know how much to offer in a highest and best situation, but stick to your numbers and do not let emotion get involved. On my long-term rentals, I like to use financing, but I may use a cash offer to give myself a better chance. Let’s Break It Down. also on that note would it help if i just ask that my bid be the last one made to the asset manager. When you receive multiple offers on your home, you have a few options as to how to … All Rights Reserved. What is the highest offer you have now? The seller can counter how they want since it is their house. You’re flattered by the mounting interest in it… and admittedly, a little overwhelmed by the sheer volume of choices in front of you. You are part of the problem in Real Estate today! Many buyers feel this is a great way to get the lowest price on a home in a highest and best situation. Many of … Im in a highest and best offer situation ..had to sign a document stating no counter offers and there was a deadline of 12 noon …then i find out they accepted an offer after the deadline and the asked me to counter offer that bid .. at an exzagerated price 20000 more then the property was listed for . When you are informed that there are multiple offers, don’t wait around to see if they will ask for highest and best. Thank you for the comment! Yes, this happens all the time. I have seen it time and time again! The banks started asking for highest and best to give every buyer a fair chance to revise their offers. What happens if a buyer or multiple buyers place an offer on the same home that you want? But you should talk over each strategy with your agent and determine what you’d prefer. As in "this is a multiple offer situation. Because of these policies, banks end up with multiple offers on many of their properties. I try to think of a multiple offer situation in this way: What is the most I would pay for the home if the house did not have a list price. So the smart move is to pick the highest one, right? My question is, if you win the highest and best by submitting an offer that is much higher than the asking price on a fannie mae home path property. In many states, the listing agent is required to tell all buyers when the seller receives other offers. Header Image Source: (Mia Baker / Unsplash). Make it attractive, maybe a little above list price. Is this even leagel. Only remove your inspection contingency if you are experienced with repairs and evaluating a home. The seller will review all offers at the same time and pick the offer they like best. The offer should be in writing, accompanied by a pre-approval if you are financing or a proof of funds letter if the offer is all cash. Some agents will actually tell you how much the other offers are for – although I don’t, as my understanding is that my clients wish the other … I also do not know how legal it is to show a confidential offer from one buyer to another buyer without their permission. Will asking buyers for their “highest and best” scare some away? Highest and best is usually the fairest way to handle multiple offers. Having said that, don’t pay more than your numbers say you should. If you’ve got somewhere to live lined up, a shorter closing date means money in your pocket sooner. Many areas in the US are firmly in the grips of a strong sellers’ market including homes for sale in Seattle WA. They are the owner of the house and they have every right to try to maximize their profit or cut their losses. I don’t try to guess what the other offers are in a highest and best situation. Multiple offer situations are never pleasant. My husband has a broker license so we are free to check any properties we are interested. Offered and was countered with just about my cap. It may actually hurt your chances of getting the house and if your agent argues that they have to accept the escalator clause, it could make the banks and listing agent mad, hurting your chances even more. Here’s How Much Money You Need to Build Your Dream Home, What Upgrades Increase Home Value? But you’re a little fuzzy on the details. But rather than … In highest and best I usually remove the closing costs, because it increases the net to the seller and makes my offer stronger. However, there are many problems with an escalator clause and it may actually cause the buyer to pay more than they would have otherwise. Just in long enough to create problems both ethically and legally! That gives you time to up your offer if you really want the property. You may get higher offers from people who haven't seen it yet. My theory is that I would rather pay a little more, and get a great deal than try to save money and get beat out. That is a good strategy, my thoughts are to jump on it and get it under contract if it is a good deal. If you want to get the best deals you have to take part in highest and best bidding wars. Highest and best is when a seller receives more than one offer on a property, and they decide to give everyone a chance to submit there best offer. It is very tough in Cali right now. Yes, it can be asked for in the offer, but the offer is not signed by the seller and they are not bound to it. Best policy is to ask for highest and best by X date, potentially after 10-20 total showings. Possibly. I just made an offer on a short sale late last week where they received multiple offers and they have asked for highest and best. In the seller’s formal request, the seller gives each buyer a chance to raise their offer and a date and time all offers must be received by the seller. Philip Unger, a top-selling real estate agent in North Haven, Connecticut, usually recommends “highest, best, and final” to his seller clients. This can go on for a number of rounds until there’s one buyer left, or the seller accepts an offer. Banks can take a long time to respond to offers, and some banks have policies that they will not review offers until a home has been on the market for a certain amount of time. LEARN HOW I INCREASED MY NET WORTH BY $600,000 IN THREE YEARS WITH RENTAL PROPERTIES WITH THIS FREE REPORT. Could you be offering much more than the 2nd highest and best offer? If you revise your offer right away, they may accept your offer without asking for highest and best and giving other buyers a chance to raise their offers. It’s easy to get blinded by dollar signs, but remember, the tactic is highest and best, not just highest. Does this happen a lot, in your experience, that banks will ask for highest and best, even when already in negotiions with one buyer? Your biggest fear? Do your best! Here is the strategy my husband used. Emotion will come into play much more with an owner occupant offer than with an investor offer. It helps to know how many offers there are, but It only takes one offer to beat you. Once you’ve evaluated them all, you can place them in order. This can shorten the negotiation process, and might even push buyers to make a higher offer under the pressure of only getting one chance. For example, if the property is listed at $200,000, you may want to offer $210,000 to beat the competition. Posted by Conor MacEvilly on Wednesday, June 29, 2016 at 7:00 AM By Conor MacEvilly / June 29, 2016 Comment. Even though this offer is $100,000, another buyer could offer $105,000 with the seller paying $6,000 in closing costs. But I have to say it is really difficult to get your offer accepted in the highest and best situation. It is tough to decide how to revise your offer and how much to raise your offer in a highest and best situation. Then, it’s back to square one and racking up days on market. If you do get 5-10, it’s usually best to narrow it down by vetting each offer and responding to the top 3 or 4 initially. I always explain my financing if I submit a financed offer in a highest and best situation. We were willing to take any property as long as we have positive cash flow. For now, multiple offers are the new normal. Asking all bidders for highest and best offers can be the most efficient way for a seller to select the offer that works best for him. I hate it when I find out I lost out on a house and I was never notified that they had other offers. The Best Bidder. In the “Highest, Best, and NOT Final” process, buyers in a multiple bid situation are encouraged to make their “Highest and Best” offer by the deadline, but are specifically instructed that this round of bidding may not be the “Final” round. Read on to get a full 360-degree explainer on the risks and rewards of asking buyers for their highest and best, with tips on how to pick a winner depending on your unique priorities for this sale. Most of this advice applies to investor offers if you are an owner occupant you have many factors to consider. Some buyers will think of the list price as the most they will offer, but this may be a huge mistake. In today’s Real Estate market we are seeing a lot of properties with multiple offers. Really enjoyed your article. “Highest, best, and NOT final,” means that once a buyer has been outbid, the listing agent notifies each buyer, giving them a new deadline to meet the current offer, or pull their offer altogether. I have been selling real estate for over 30+ years and guys like you float in and float out of the market! Ultimately, Unger urges his sellers not to get too mixed up in the price tag, “the goal is to get to the closing table, which offer is going to be the strongest that’s going to get you there the fastest? In this post on highest and best use analysis, we will focus only on real estate although this concept can be applied many other assets. I want to share my story with you. John, someone is going to get it. We had the highest and best situation once. If there is the listing agent receiving multiple highest best offers on a foreclosure how do i know It’s illegal and unethical for Agents but maybe only unethical for Broker. A highest and best disclosure form to sign has never ever been sent by an automated system within Fannie Mae. In a multiple offer scenario, the highest and best tactic can push your list ing to new heights, whether that be offers above asking price, shortening of the sale, or removal of contingencies. Seems you are kind of sleazy in your business practices! The multi-offer process is intended to provide all interested buyers with a fair opportunity to submit their best offer for a property they wish to purchase. This is a brief video of multiple offer situations. Not always. Really? 2. Banks, in particular, have been sued a lot and they want to do everything by the book, with paperwork to prove it. They can't counter each one and they can't very well tell each one what the other offered. “As a seller’s agent, if I have multiple offers, we’ll tell buyers, ‘We want your highest and best offer by Tuesday at 5 p.m.’ and that’s it,” says Unger. I am the founder of InvestFourMore, Managing Broker of Blue Steel Real Estate. Think about which offers remove risk, and get you on your way with the least effort possible — because as a seller, … More than one buyer might submit an offer for the same property under these circumstances, resulting in multiple offers on the most desirable homes. Price is just one of many considerations when deciding which offer is best for you and your home. I have a question for you. I would not jump to conclusions about people without knowing them. It doesn’t hurt to ask and see if they will answer. Most banks simply will not accept an escalator clause. Make an offer that will leave you with no regrets if yours turns out not to be the highest and best. This is true especially with foreclosed properties. Unless you’re an Owner Occupant then you may be able to overpay and let Appreciation catch up with you. Emma's work has been featured in Huffington Post, NPR and XOJane. story by Janet Lees illustration by Robert Carter Chris Keleher provides insight on Multiple Offers and Bidding Wars ... up images of hitting the jackpot on your home by pitting buyers against each other to “win” your home with the highest bid. With flips you never know when the market might turn and negative cash flow is never a good thing on rentals. Buyers who aren’t comfortable with making highest and best offers may be better off delaying a purchase … How Much House Can I Afford If I Make $70,000 a Year? You couldn’t be more relieved to attract an offer on your home, when another buyer throws their hat into the ring. The reason I do this is that I can pay cash if needed and my bank doesn’t require appraisals on most of my loans. Offer your highest price, one you can live with if your offer should be rejected. “…don’t pay more than your numbers say you should.” Sellers enjoy the luxury of choosing the highest and best when they receive numerous offers. We finally got a deal in Aug 2013. They countered during the weekend, I countered back on the weekend, then on Monday at noon when I still hadn’t heard back, I contacted the listing agent, who said another offer had come in. The buyer has stated in writing they are willing to pay $110,000. The second offer is actually lower than the $100,000 offer, but because of the escalator clause, the first offer would raise to $106,000. Picking the wrong offer. The Homepath online offer system can not tell you there are multiple offers, if there aren't really multiple offers in there. For myself, I have the option of offering with a loan or cash on most properties. Why not leave your offer the same as your original offer and if you get it great, if not move on. It’s easy to get blinded by dollar signs, but remember, the tactic is highest and best, not just highest. The concept of highest and best use was popularized by economists Irving Fisher..