What Does “Highest and Best” Offer Mean?
Multiple offers in Wellington Florida have become commonplace again and homebuyers are being instructed to submit their “highest and best” offers. While the “highest and best” offer defines itself, as a listing agent I do not think every home buyer fully understands what it actually means and that every seller will handle multiple offers definitely.
Lately, all of the “highest and best” offer situations I have been involved in seem to have one constant commonality, buyers are increasing their purchase price, but do not change any of the other offer terms; escrow, inspection period, mortgage contingency period, closing date, or removing other contingencies. While a buyer can have the “highest” price if their other terms are not the “best” they could possibly lose in a multiple offer situation.
When a seller calls for “highest and best” they are asking the buyer to submit their best offer, both in price and terms.
A few months ago one of my Wellington home sellers received 8 offers and once the “highest and best” deadline came to a close the seller quickly narrowed it down to the two strongest offers. The two offers were identical, except for the inspection period. One buyer offered a 5-day inspection period while the other offered a 3-day inspection period. Guess which offer the seller accepted? Yes, in this “highest and best” multiple offer situation it came down to a 2-day difference in the inspection period.
If you are purchasing a home in Wellington Florida you might have to prepare for battle! Before submitting an offer it’s important to understand the market conditions and what you might be up against. Make sure you fully understand every term you are offering the seller and how those terms may affect your chances of winning in a multiple offer situation.
The DO NOT’s of Multiple Offers
- DO NOT just submit your “highest” offer, make sure you submit your “highest AND best” offer.
- DO NOT think the only term that matters to the seller is price because when a seller receives 10 offers with the same purchase price it does come down to the other terms. If you can do the inspection in 2 or 3 days don’t put 10 days.
- DO NOT say you will shorten the inspection period or will put more money in escrow, do it! Oftentimes in a multiple offer situation, the seller is looking at what is in writing, NOT what a buyer says they will do.
- DO NOT submit an offer with outdated proof of funds or no proof of funds at all. When a seller has 5 other offers on the table that are just as strong as yours they most likely will not wait for you to provide current proof of funds.
Multiple Offer Example
Below is an example of the types of offers I am seeing in “highest and best” multiple offer situations with a list price of $500,000, if you were the seller which offer would you choose?
Best and Final Offer Example
In my experience, most Wellington sellers would accept offer #3. While offer #4 has the highest offer price the buyer is also asking for a $10,000 seller concession, so they are essentially offering the seller $500,000, NOT $510,000 and it’s contingent on obtaining financing.
Offer #3 is cash and does not have a mortgage contingency. It has the highest escrow deposit, along with the shortest inspection period, and will ultimately net the seller the most money. It doesn’t have the shortest close date but these particular cash buyers might be more than happy to close quickly if the seller counters that term.
Which offer would you choose?
Popular Articles About “Highest and Best” Offers
I have written countless articles about multiple offers along with articles about highest and best offers. Below are some of the most popular and helpful articles I’ve written on these topics, which tend to go hand in hand.
- How Do Sellers Handle Multiple Offers?
- “Highest and Best” What Does it Mean When Buying a Home?
- 4 Huge Buyer Misconceptions About Multiple Offers
- How to Win in a Multiple Offer Situation
- 9 Things Your Agent Should Do In a Multiple Offer Situation
- Why are Buyers Losing in Multiple Offer Situations?
- What is an Escalation Clause in Real Estate? 7 PROs and CONs
If you are buying a home in Wellington it’s important to understand the current market conditions and what you might be up against. If multiple offers are commonplace in your price point it might be best to submit your highest and best offer from the start. This is where a top Realtor, like myself, comes into play because I will be able to guide you through the entire home-buying process. Working with both buyers and sellers I know firsthand what it takes to win in a multiple offer situation and FIGHT for my clients until the end.
Please consider spreading the word and sharing; What Does “Highest and Best” Offer Mean?If you are in the market to buy a home you might be wondering what does “Highest and Best” offer mean and here is the answer! #realestate #homebuying
About the Author
Top Wellington Realtor, Michelle Gibson, wrote: “What Does “Highest and Best” Offer Mean?”
Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell, or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.
Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.