Thursday, 02 December 2010 09:16 Rochelle Le Cavalier
Dear Pink Realtor,
After searching and searching for a great deal on a house in decent shape and losing out to other buyers “bidding” on a property three different times, I finally got an offer accepted on a foreclosure after submitting a “highest and best” offer $10,000 over the asking price. Although I wondered if there really were other buyers or not, I anted up and paid what I think is a fair price. Not an excellent price, not a steal, but fair. Is the “highest and best” bidding thing real or just a ploy by the Realtors (no offense) and banks to get more money?
Is “Highest and Best” Bologna?
The “highest and best” offer is requested by the listing agent when there are multiple offers on a property. These are most commonly seen in bank-owned properties but can also be found in non-REO deals as well. Every party who made an offer has a second chance to come back with the highest and best – this includes all aspects of an offer such as closing timeframe, cash deal versus financing, and offer price.
As a Realtor representing many investors and savvy buyers looking for a great deal, I can assure you that I have also wondered on a few occasions about these other buyers being asked for the “highest and best offer” in a situation where there are multiple offers on a property. Having lost a few myself, I assure you, the market conditions of today are indeed causing several folks to jump on the best deals and compete for them. The advice I give my buyers: Offer a price that is consistent with what the market has recently shown is reasonable AND that you will feel satisfied with having paid.
Any good Realtor will be able to do a Comparative Market Analysis (CMA) and show you what has recently sold that is comparable to what you are buying. It is essential that the comparables being used are SOLD properties having closed no longer than 90 days before. Properties in pending status and active/available listings are in no way a reliable indicator of anything. I can offer my pink Toyota Camry for sale for $80,000, but it is unlikely to sell at that price.
I also make it a point to remind my clients that although everyone wants to feel that they have gotten a good deal, the difference of a couple thousand dollars will make very little difference on any level. For example, if you would be willing to pay $95,000, but not $100,000, you may consider that this would be almost the same mortgage payment, taxes, and other expenses that over time will make even less difference as the home appreciates. Taking a pass over small dollars is often regretted.