What does the "highest and best offer" mean anyway? Is this just a scam? Why can't the seller just focus on one offer at a time?
These are common questions especially with first time buyers. I had a recent situation in which my buyer clients were looking at homes in a very desirable town just west of Boston. It just so happens that this town was ranked as one of the top small towns out of hundreds around the country by a prominent magazine. Of course, there was great competition amongst buyers to have the privelege of owning there so prices reflected this and multiple offers were unfortunately quite common.
When my buyers wanted to submit an offer on a home on its first day on the market, we were told there were many offers being submitted. The listing agent asked for my buyers' "best and final offer" (same as highest and best). This was extremely frustrating for my clients to hear and they felt that it was unjust--they expressed their belief that everyone should have multiple chances to purchase. I explained that given the competition, this method is the only FAIR way to determine the best buyer for the home. They would have one chance to give their highest number bid on the home. Needless to say, they refused to give their highest bid and did not get the home.
There is no doubt about the fact that this can be very stressful on buyers who do not want to overbid. (The chance of overbidding is kept in check due to the bank's appraisal must reflect the accurate value of the home--accurate appraisals were not necessarily the norm a few years ago.) The unfortunate reality is that there are presently not enough homes on the market so it can be competitive for each good home a buyer pursues. During the spring market, the inventory will increase so maybe there will be less competition amongst buyers however indicators point to higher interest rates and maybe higher prices.
If you need tips on buying with less stress, give me a call or email.
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