Special offer

The call for highest and best

By
Real Estate Agent with Thompson Company, REALTORS® 240.593.2860 MD594797

When the Silver Spring, MD Real Estate market is a competitive one, when there are more buyers than listings and multiple offers are not an anomaly, then the listing agent - on behalf of the sellers - will often call for highest and best offers.

It's a strategy that is used in multiple offer situations but is it a good one? It depends on who you are of course, the seller or the buyer.

Andrea Bedard, Thompson Company, REALTORSIf you are the seller then this strategy can eliminate rounds of negotiations and up the offers that you have received. Ideally, you will end up with the highest price and hopefully most favorable contract terms for you. But keep in mind that price is not the only term you should pay attention to. When is the closing date and does it work for you? How many contingencies are there? How much of a seller subsidy are the buyers asking? What is the status of the buyers financing and who is the lender?

Could you still negotiate with the buyer who submitted the highest and best offer? It depends. The buyer does not expect you to and he already put his best foot forward. But if the closing date needs to be changed to fit your needs or time lines need adjusting, then these are things that can still be worked out. If you ask above and beyond what the buyer is willing to do, however, you could risk losing your highest and best offer.

If you are the buyer then the call for highest and best can feel like throwing stuff blindly at a wall in the hopes it will stick. It's best to remain calm, review the comps (again) and decide on what this house is worth it to you. Make an offer that will leave you with no regrets if yours turns out not to be the highest and best.

Could you be offering much more than the 2nd highest and best offer? Possibly. One way around that is to include an escalation clause. You offer a price and agree to escalate up to a certain amount in steps. If you offer 300K for example but are willing to go as high as 310K, then you say you'll up any other offer by $500 or $1,000 until your max is reached. Again .. you decide what that max is. The comps should still support the price unless you are willing to pay cash over the appraisal value. You can also tweak your other offering terms a bit. Perhaps your agent can find out which closing date would be ideal for the seller. You can make sure your loan preapproval is as strong as it could possibly be and you could also increase your earnest money deposit.

The call for highest and best - is not unusual when the Silver Spring, MD Real Estate market is a competitive one.

Homes For Sale in Silver Spring, MD

Posted by

Andrea Bedard
Thompson Co., REALTORS®

Silver Spring, Maryland
andreabedard.com

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Comments (11)

David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Good post Andrea. I was not sure where this was going to go based on the title but your advice is sound!

Nov 03, 2014 11:59 AM
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

This is a very informative post for both buyers and sellers. In dealing with a lot of bank owned property...I got use to hearing the phrase...highest and best offer. 

Nov 03, 2014 12:05 PM
Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in Real Estate & German, M.A. ABR ASP CIPS

Thank you David!

I was inspired by a recent scenario I witnessed Debbie. Thank you!

Nov 03, 2014 12:07 PM
Ranee Bray
TCP Real Estate - Cedar Park, TX
North of Austin Homes

I see this frequently here in Austin.  It's feels a little presumptious I guess... especially when I still see the listing after a week.  I prefer when agents put something like "all offers to be reviewed on Monday, XX/XX"  This gives a good 3 days exposure on the market and then of course if it's a great home and priced well they usually will get multiple offers, depending on the demand of the neighborhood.  I agree with you though... buyers should always still consider comps and not get too wrapped up in the hype.

Nov 03, 2014 12:07 PM
Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in Real Estate & German, M.A. ABR ASP CIPS

I would find it a bit odd to see the call for highest and best in listing remarks Ranee. We usually encounter it when the seller already received multiple offers. I, too, caution not to get wrapped up in the hype!

Nov 03, 2014 12:09 PM
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

Highest and best, escalation clauses, these are the reasons that I need a qualified agent to help me Andrea.

Nov 03, 2014 12:42 PM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Highest and best were pretty commonplace here a few years ago, not so much now. However, the strategy of using an escalation clause is a great one whenever a buyer is in competition for a home.

Nov 03, 2014 01:49 PM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

It was never the norm in my market, we saw it a bit on some under priced REO properties, but that's about it.  Not really sure the seller always took the best terms for them either.  Sometimes they just base it on price, which like you said might not have been the best deal for them.

Nov 03, 2014 02:07 PM
Winston Heverly
Coldwell Banker Access Realty - South Macon, GA
GRI, ABR, SFR, CDPE, CIAS, PA

Andrea,  a beautiful read today with some interesting must have useful info. Hope to catch some others down the road.

Nov 03, 2014 02:08 PM
Laura Filip
Laura Filip Broker , Opening doors for All Seasons of Life - Whitesboro, TX
What can we do for you today?

Highest and best is a good thing for the most part. But sometimes the highest and best offer point is not what the seller is looking for especially when it is a foreclosure. Have a blessed day 

Nov 04, 2014 03:18 AM
Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in Real Estate & German, M.A. ABR ASP CIPS

Of course I love your comment Tom!

Otherwise it's really just throwing something out there blindly Troy and the buyer could be going much higher than necessary.

Hi Tammy, there is so much more to an offer than just price. I like to break it all down for my seller clients.

Thank you Winston.

I don't know what it is like in the REO world Laura but around here the call for highest and best usually means that the price will be above list price or, at least, right at.

Nov 04, 2014 06:38 AM