What does Highest & Best Offer Mean?

The housing market is absolutely crazy right now and your agent has probably stated that the listing agent is asking for the highest and best offer by a certain timeline.

Usually, when purchasing a home the buyer will submit an offer, the buyer and sellers' agents negotiate on the offer, and then the final and best offer is reached. Today's market is unique and there are many offers being presented and asking for the highest and best offer allows for all potential buyers to make an offer by a certain deadline. Often we would think that the highest and best offer pertains to the purchase price alone; however, there is much more than the purchase price that must be considered when looking at offers.

The thought of just increasing the purchase amount may not be enough or even the most important factor for the seller. When there are multiple offers, especially in the same range, it comes down to the terms of the contract that can help you beat out the competition. In a purchase agreement, there is a contingency period for the home inspection, buyer to obtain financing, and other concessions that the buyer can ask from the seller. It is important to remember that all of these things are negotiable. You can reduce the timeline by getting a home inspection right away, already being pre-approved for financing, and by reducing the number of concessions that you are asking the seller. In addition, you may want to increase the amount of earnest money that you are offering. This shows you have more skin in the game and are a serious buyer.

It is really important that you work with a Realtor® who understands the market and what you may be up against. It is also important that you understand that just because you put in the highest and best offer that you may still be outbid for reasons that are no fault of your or your agent's own. This market is one that we have not seen the likes of and houses are going for tens of thousands of dollars over asking price, appraisal waivers, and no repair procedures. Just remember this is not always the best option for buyers, especially first-time homebuyers. However, Realtors®, like myself, are getting creative with escalation clauses, contingencies, and other negotiation tactics that are best for their client. Make sure you find an agent that understands your unique needs and will advocate for you. We all hope that our highest and best comes with the response of acceptance and.......