You can’t exactly talk directly to the listing agent, but you need your agent to get as much information as possible. In a highest and best situation, the bank notifies every buyer they have multiple offers, and to submit their highest and best by a certain date and time. I personally don’t ever count on a appreciation as an exit strategy. On the other hand, an earnest money deposit can show that a buyer is serious, even if they have a lower offer. While there’s no “right” offer, sellers need to consider more than just price when entertaining their options. While some sellers might get caught up on the highest offer, prioritizing other elements can drastically change the trajectory of the sale, for better or worse. Just in long enough to create problems both ethically and legally! 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. If only people would just sell their house and quit making things complicated for everyone. Keep in mind there are four scenarios when dealing with multiple offers as follows: Go back to all offers with a “best and final”. Sellers enjoy the luxury of choosing the highest and best when they receive numerous offers. You’re flattered by the mounting interest in it… and admittedly, a little overwhelmed by the sheer volume of choices in front of you. When she's not combing her neighborhood for open houses, she's writing about technology, real estate or data. The offer should be the highest they are willing to pay and carry the best terms they can present. Seems you are kind of sleazy in your business practices! Buyers who aren’t comfortable with making highest and best offers may be better off delaying a purchase … You are part of the problem in Real Estate today! Hi Mark, great article. Some buyers will think of the list price as the most they will offer, but this may be a huge mistake. Congratulations to our sellers who received the offer of $40k over asking price!!!! Unless you’re an Owner Occupant then you may be able to overpay and let Appreciation catch up with you. Just make sure you can produce a proof of funds letter showing you have the cash. 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. Let’s Break It Down. When you have a home for sale, you may receive multiple offers from prospective buyers. How to Juggle Multiple Competing Offers on Your House (HomeLight, Apr. One way around that is to include an escalation clause. They can't counter each one and they can't very well tell each one what the other offered. Having said that, don’t pay more than your numbers say you should. This can go on for a number of rounds until there’s one buyer left, or the seller accepts an offer. It is paramount for a buyer that is getting involved in a multiple offer situation, that they have a great real estate agent representing them that has experience with multiple offer situations. Remember, in a highest and best scenario you’re asking the buyer for both highest price and best terms. With flips you never know when the market might turn and negative cash flow is never a good thing on rentals. I won’t regret trying to save a few bucks by offering less than I was ultimately willing to pay. But I have to say it is really difficult to get your offer accepted in the highest and best situation. On my long-term rentals, I like to use financing, but I may use a cash offer to give myself a better chance. I just got bit submitting a highest and best with an escalation clause. If you have any experience with highest and best, you know the listing agent will not answer most of these questions. Instead, once all the bids are in, the seller reviews them, selects the best offer, and then notifies the losing buyers that they were outbid. I have been selling real estate for over 30+ years and guys like you float in and float out of the market! An escalation clause is when a contract states the price will be this unless a higher offer is received, then the price will rise this much over the next highest offer. For example, if the property is listed at $200,000, you may want to offer $210,000 to beat the competition. Sorry for the late reply I was on vacation. Keep reading to see the best ways to deal with multiple offers and bidding wars on your home. 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. Yes, this happens all the time. This is yet the best time to sell. You need to look at supply and demand, how much you love the house, and what neighborhood prices are. Does this happen a lot, in your experience, that banks will ask for highest and best, even when already in negotiions with one buyer? The strategy was worth trying if you are an agent and investor. Most of this advice applies to investor offers if you are an owner occupant you have many factors to consider. Buyers get caught up in the auction mentality and often have buyer’s remorse once the seller signs their offer. But you should talk over each strategy with your agent and determine what you’d prefer. they cannot accept two offers at once. HUD only cares about the net price to them. 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. For more detailed tips on getting your offer accepted here is a great article on how to make an offer that will be accepted. You couldn’t be more relieved to attract an offer on your home, when another buyer throws their hat into the ring. It is very tough in Cali right now. Is this even leagel. If you are in a multiple-offer situation, all interested buyers should be told upfront to come in with their highest and best offer and given a date when you will consider them all. also on that note would it help if i just ask that my bid be the last one made to the asset manager. It is better to lose out on a home than pay so much that it stops becoming a great deal. I’m a beginner investor and a new agent just got my license in Feb. 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. Kim. It helps to know how many offers there are, but It only takes one offer to beat you. He talked to the listing agent and offered 2/3 of his commission to her so the listing agent would be on our side and helped us to get the offer so she could earn more commission. Finally, getting above asking price means more cash at closing, but contingencies can throw a wrench in the plan. It is tough to decide how to revise your offer and how much to raise your offer in a highest and best situation. It is the sellers right to sell the house however they like. Multiple offer situations are never pleasant. When you receive multiple offers on your home, you have a few options as to how to … An increase in earnest money can also get the sellers attention in a highest and best offer situation. Thanks. From there, the seller will select an offer outright, rather than start further rounds of negotiation with each individual buyer. Many buyers do not like it when a seller asks for highest and best. I have a begginer question: Is this technically allowed to submit the seccond buying offer, to be lower then the first one, after getting a Highest and Best notice? 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. I live in Orange County, California. My husband has a broker license so we are free to check any properties we are interested. 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. there is a risk in that. Accepting an offer with multiple contingencies translates to more opportunities for the buyer to back out and the deal to fall through. Once you’ve evaluated them all, you can place them in order. 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. the agent is not letting the other bidders he is working with let them know the bid i’m making But rather than … Mark also owns 20 rentals including a 68,000 square foot commercial strip mall. Multi-offer processes can differ from agency to agency, but they can only be described as multi-offer when there is more than one offer in writing. The worst thing that can happen is you get beat out, so why not try? Posted on September 22, 2020January 14, 2021 4-5 min read. Foreclosure properties that I deal with, if they get multiple offers, tell us to ask each for their highest and best offers. I was recently in the middle of negotiating with a bank (as a buyer) when another offer came in, and they asked for highest and best. All you can do is analyze the situation as best you can, and make the best offer you can based on your own numbers and needs. The “best” component refers to all the other terms included in a contract that can be tweaked to sweeten the deal — such as waived contingencies, putting down more cash upfront, or offering a more flexible closing date. The best offer isn't always the highest one. For example: Escalator clause: If the seller receives any offers higher than $100,000, this offer price shall increase to $1,000 more than any higher offer up to $110,000. Thank you for the comment! But you’re a little fuzzy on the details. It was a small condo. LEARN HOW I INCREASED MY NET WORTH BY $600,000 IN THREE YEARS WITH RENTAL PROPERTIES WITH THIS FREE REPORT. 4. I will remove my inspection contingency on some properties. I have been involved in many multiple offer situations as a buyer, seller and listing agent. You offer a price and agree to escalate up to a certain amount in steps. 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. For many, that makes Offer B compelling, even if it’s below listing price since it means money in your hands sooner, and more skin in the game for the buyer. You can try, but there is no guarantee. Emma's work has been featured in Huffington Post, NPR and XOJane. The Best Bidder. I make sure I tell this to the seller so they know I will close quickly without having any appraisal issues. Call us now and let’s us sell your house for top dollars! In today’s Real Estate market we are seeing a lot of properties with multiple offers. 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. Highest and Best Offer. Is there anything special the seller is looking for? You can break “highest” and “best” into two distinct parts. If someone is willing to pay more, then I am confident I made my best offer and gave it my best shot. Highest and best pretty much means you aren’t getting the house. I am not sure how they would accept an offer and then counter your offer. That is one strategy you can use to get great deals. You may get higher offers from people who haven't seen it yet. For myself, I have the option of offering with a loan or cash on most properties. I have been in the business 15 years and my dad has been an agent longer than you. It’s official: Your house is a hot commodity. The “highest, best, and final” strategy — sometimes simply called “best and final” — means that each buyer who has submitted an offer will have one shot to put forward their most attractive price and terms. 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. I always explain my financing if I submit a financed offer in a highest and best situation. Copyright © 2019 InvestFourMore. In a multiple offer scenario, a seller may choose to employ the “highest and best” offer tactic, rather than wade through each offer in detail and negotiate with multiple buyers at the same time. When selling your home, the highest offer is not always the best offer. I am a Real Estate Agent, Entrepreneur, an author and a Real Estate Investor. Be Your Own Builder: The Cheapest Way to Build a House, How to Buy a House in Fremont: The Ins and Outs Needed to Beat the Competition, Learn The Time-Blocking System That Helped Cliff Lewis Sell 57 More Homes in One Year. Could you be offering much more than the 2nd highest and best offer? All Rights Reserved. Many traditional sellers (not banks) using highest and best as well. Getting Started with Real Estate Investing, Rental Property Cash on Cash Return Calculator, The InvestFourMore Blueprint For Real Estate Investing. It’s easy to get blinded by dollar signs, but remember, the tactic is highest and best, not just highest. I used to list a lot of bank foreclosures, and banks use highest and best in almost every situation when they receive multiple offers. Another tip is to always ask the listing agent to notify you if they receive other offers after you have submitted your offer. Although stressful and frustrating, highest and best scenarios do give all bidders an equal opportunity to have their offers considered. Ask your second-best offer if they are willing to be placed in “back-up” position in case something falls through with the first-place buyer. Your biggest fear? Think about which offers remove risk, and get you on your way with the least effort possible — because as a seller, … Many times traditional sellers will receive multiple offers, but not ask for highest and best. It was almost more than any of us could handle.”, To combat the confusion, Unger entered each offer into a spreadsheet so he could clearly outline the terms and finances behind each buyer’s interpretation of “best and highest.”. A lot of buyers automatically assume the highest offer (most money) is the best offer, but that isn't always the case. If you are dealing with multiple offers, you most likely have a real estate agent, and the seller has their own listing agent. It is really up to you. 3. 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. 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. Unger’s red hot market, he recently sold a home that received 18 offers on it. The buyer has stated in writing they are willing to pay $110,000. Can you then negotiate a lower offer with the seller once you are in escrow? Emotion will come into play much more with an owner occupant offer than with an investor offer. In contrast, the fallout rate on multiple offers is often as high as 50 percent. That gives you time to up your offer if you really want the property. Not always. We were so tired of house hunting and making offers. 19 High-ROI Improvements Buyers Love, How Much Money Do You Get Back in Taxes for Buying a House? The seller is not obligated to show any other offers to the buyer or their agent. Think about which offers remove risk, and get you on your way with the least effort possible — because as a seller, there’s nothing more relaxing than a deal that closes on time with few surprises. We were willing to take any property as long as we have positive cash flow. OK, well, next time my first bid will be at asking price or a little over. Please submit your highest and best offer by noon tomorrow". 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? Most banks simply will not accept an escalator clause. They are the owner of the house and they have every right to try to maximize their profit or cut their losses. Wooo hooo! As a listing agent myself I won’t answer any of them, except how many offers there are. I am the founder of InvestFourMore, Managing Broker of Blue Steel Real Estate. I hear buyers say; “I don’t want to get in a bidding war” and they withdraw their offer. Many of … I’ve been reading your blogs almost every day and I find it is very informative. What happens if a buyer or multiple buyers place an offer on the same home that you want? Escalation clause???? Handling Multiple Offers. 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. Sometimes I will ask for the seller to pay closing costs in my offer to save cash. In effect, you ask buyers to bring their shiniest offers to you by a specific deadline — such as “Friday at 5 p.m.” This type of message alerts buyers that their offer is not your only option. With everything from 50% down to closing cost assistance, the offers ran the gamut. 6 Eye-Opening FSBO Facts to Know First, Log Home Maintenance: 7 Tips To Give Your Beloved Cabin Much-Needed TLC, top-selling real estate agent in North Haven, Connecticut, buyers won’t typically start with their highest offer, contingencies can throw a wrench in the plan. Narrow it down to the top 3 or 4 offers – If you do receive multiple offers, chances are it will be 2 or 3, not 5-10. Make it attractive, maybe a little above list price. This is not a form that is endorsed by KCRAR or our Real Estate Commission! Header Image Source: (Mia Baker / Unsplash). It is not worth losing a good deal to try and save a little bit negotiating. I would not jump to conclusions about people without knowing them. Any other higher offers must be given to buyers agent to confirm the higher price. In many states, the listing agent is required to tell all buyers when the seller receives other offers. If the items were easily viewable when you made the offer, the seller will not negotiate much if at all. A smart seller will simply counter the buyer at $110,000 and does not have to show any other offers to the buyer or their agent, because they did not accept the original offer with those terms. Really enjoyed your article. This is true especially with foreclosed properties. Hi Mike, Say you ask your buyers for their highest and best offer on your home, initially listed for $250,000 and receive these terms: Well, it depends on your goals as a seller. Why not leave your offer the same as your original offer and if you get it great, if not move on. The best properties are receiving a dozen of more offers in the first 3 or 4 days of listing, or offering a new price drop. That is a good strategy, my thoughts are to jump on it and get it under contract if it is a good deal. Whenever I am in a highest and best situation I make the highest offer I can based off my buying criteria and profit potential. Mark Ferguson is the author and creator of InvestFourMore. Multiple offers received and the highest offer accepted! Here are some tips on how to win a multiple offer situation. “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. You also may be able to legally have the listing agent represent you as the buyer in which case that should not be a problem. The best and final offer in a real estate bid is the most favorable terms the buyer is willing to offer the seller for the purchase of the property. Usually highest and best means the house is under priced and people are mad the seller won’t sell it to them for a low price. I have seen it time and time again! Then, it’s back to square one and racking up days on market. The banks started asking for highest and best to give every buyer a fair chance to revise their offers. 30, 2020) Multiple Offers-Competing Home Offers (the balance, Apr. Banks and traditional sellers also use highest and best to try to get the most money they can for their house. The seller can counter how they want since it is their house. We finally got a deal in Aug 2013. When homebuyers are told to submit their “ highest and best offer ” the listing agent is indicating that there are multiple offers on the property and that all interested buyers should submit their best possible offer. Mark started Blue Steel Real Estate, a real estate brokerage in 2018. If you want to pay that much for the house than accept it. 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. Plan to Sell Your House Yourself? No more dilly-dallying! There is very little chance the listing agent will tell you how much the other offers are and even if they do, the other buyers could raise their offers. Even though this offer is $100,000, another buyer could offer $105,000 with the seller paying $6,000 in closing costs. I Want My Own Home Library: Do Built-In Bookshelves Add Value? Sometimes sellers deliberately set a price below comparable sales in an effort to generate multiple offers. 1. Philip Unger, a top-selling real estate agent in North Haven, Connecticut, usually recommends “highest, best, and final” to his seller clients. Pretty soon we were asked for our highest and best, and I ended up losing the deal. When you are informed that there are multiple offers, don’t wait around to see if they will ask for highest and best. It’s easy to get blinded by dollar signs, but remember, the tactic is highest and best, not just highest. Mark has flipped over 175 homes including 26 in 2017 and 26 in 2018. The biggest reason is they want to formally give every buyer notice of multiple offers and give them a chance to raise their offer. 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. If you can offer cash, it almost always looks better than a financed offer. Price is just one of many considerations when deciding which offer is best for you and your home. There are many different strategies you can use when trying to win a highest and best situation. If you want to get the best deals you have to take part in highest and best bidding wars. However, there are many problems with an escalator clause and it may actually cause the buyer to pay more than they would have otherwise. Really? Usually, I only remove my inspection contingency on newer homes that I have a very good idea about the repairs needed. If you raise the earnest money and remove the inspection contingency, this can really increase the chances of your offer being accepted. In a multiple offer scenario, the highest and best tactic can push your listing to new heights, whether that be offers above asking price, shortening of the sale, or removal of contingencies. 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. 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 . More than one buyer might submit an offer for the same property under these circumstances, resulting in multiple offers on the most desirable homes. Aug 31, 2016 - It can be frustrating buying a house in a hot market when the seller receives multiple offers. Get free, objective, performance-based recommendations for top real estate agents in your area. 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. Coming up with crazy gimmicks! Posted by Conor MacEvilly on Wednesday, June 29, 2016 at 7:00 AM By Conor MacEvilly / June 29, 2016 Comment. If I am notified a seller has multiple offers, I immediately ask if they are asking for highest and best. It may be illegal to offer your commission to the other agent if it is not disclosed to the seller. However, there are some instances where the tactic won’t fly. Because of these policies, banks end up with multiple offers on many of their properties. In a multiple offer scenario, the highest and best tactic can push your listing to new heights, whether that be offers above asking price, shortening of the sale, or removal of contingencies. If there is the listing agent receiving multiple highest best offers on a foreclosure how do i know “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 don’t try to guess what the other offers are in a highest and best situation. I also do not know how legal it is to show a confidential offer from one buyer to another buyer without their permission. So the smart move is to pick the highest one, right? In the past, most traditional sellers may let all buyers know they received other offers, but not officially ask for highest and best. In highest and best I usually remove the closing costs, because it increases the net to the seller and makes my offer stronger. It would put the listing agent in a very bad situation. The seller will review all offers at the same time and pick the offer they like best. It also compels them to put their best foot forward and hold nothing back. How Much House Can I Afford If I Make $70,000 a Year? 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. I had put in an offer on a Friday, the minute the property went on the market. Most sellers will ask the buyers who made original offers for their highest and best offer by a particular time or date. Highest and best use analysis produces the highest value for a property based on the concept of maximum productivity. For now, multiple offers are the new normal. 5. Many banks require the buyers agent to submit offers to them directly now. If they don’t know or say no, I will revise my offer right away. If a home has had a few offers fall apart because of inspection issues this can be a great way to get the seller to accept your offer. Hi Mark, Alternately, they could just reject the multiple counter offer. 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. 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. Having multiple offers, on the other hand, is not excellent news for buyers. It’s easy to get blinded by dollar signs, but remember, the tactic is highest and best, not just highest. What is the highest offer you have now? Banks, in particular, have been sued a lot and they want to do everything by the book, with paperwork to prove it. Offered and was countered with just about my cap. by Emma Diehl If it is disclosed you may be able to do it. I want to share my story with you. Remember that the list price is not the only thing you should base your offer on in a highest and best situation. 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. This is a brief video of multiple offer situations. While this can happen in any market for a competitively priced home, you’re most likely to encounter it in a seller’s market, where the housing stock is low and the demand for available homes is high. What you're saying Amy simply isn't true. 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 … Better Business Bureau. The market was crazy at that time. Instruct your agent to tell all showing agents that you have pending full price offers on the table and to bring their best asap if interested. Best policy is to ask for highest and best by X date, potentially after 10-20 total showings. As in "this is a multiple offer situation. The seller will review all offers at the same time and pick the offer they like best. © HomeLight, Inc. 100 1st Street, Suite 2600, San Francisco, CA 94105. Highest and best is usually the fairest way to handle multiple offers. I am a HUD and REO listing broker as well as a real estate investor, and I am in highest and best situations all the time on my listings and as a buyer. I hate it when I find out I lost out on a house and I was never notified that they had other offers. There is a chance they will never ask for highest and best, but you can still revise your offer. Another tip is to always ask the listing agent to notify you if they receive other offers after you have submitted your offer. If you have been making offers on bank owned properties lately you have probably heard the term "highest and best offer". We finally closed the deal after a month. Become an InvestFourMore Insider to get exclusive content, calculators, and deals. What would you recommend I should do at this point? 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. Explain my financing if I submit a financed offer in a highest and best multiple offers highest and best! For buyers asking buyers for their “ highest ” and “ best ” into two distinct parts the! Notice of multiple offers notified that they had other offers my offer right away this advice applies to offers! Way around that is one strategy you can? ” until there ’ s no “ right ”,. Part of the house however they like best if it is not always highest. 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To craft a deal out on a Friday, the InvestFourMore Blueprint for Real Estate agent, Entrepreneur an.