If you talk to ten different sellers in a sellers’ market, you will learn that those sellers will probably handle a multiple offer situation in ten different ways. As a buyer you should understand what sellers are thinking when they receive multiple offers.
Some sellers when presented with a multiple offer situation, will look for the “highest and best” offer on their home. So, what does it mean when the seller requests “highest and best”? Basically, the seller is giving every buyer an opportunity to change their offer. This way they can submit their best offer by a certain day and time. The highest and best offer should contain the buyer’s highest purchase price, an offer of their highest escrow amount, least number of contingencies, shortest contingency periods, and best closing date.
This is where buyers take off the gloves and start swinging. I mean it is common for home buyers to offer well above list price to the tune of 1%-10% in a multiple offer situation. This is when the buyer must determine how much they really want this home. As a buyer you must understand that the seller does not have to disclose that they received multiple offers, especially if one offer stands out. So instead of requesting the highest and best, some sellers may choose to counter one offer and see if they can come to terms.
Typically, a seller may decide to counter one offer because there are only a few terms they would like to change. Some buyers will jump at the opportunity to avoid a bidding war and accept the seller’s counter. Not every seller wants to go the highest and best route.
It is rare, but sometimes a seller may choose to do absolutely nothing. Some sellers assumed that if a buyer really wanted their home, they will chase them. This strategy doesn’t always work out for the seller.
With multiple offers being commonplace in today’s market. Some buyers are submitting their “highest and best” offer from the start in an attempt to avoid a bidding war. This is course can be a win-win, for both parties.
When buying in any market homebuyers need to understand the real estate market they are jumping into. If they’re in a seller’s market where homes are receiving multiple offers, they’ll probably want to submit their highest and best offer from the start. This is where working with a Realtor on a plan can greatly benefit a buyer. Your agent will not only be able to guide you through the process, but also educate you along the way. A good agent can help a buyer understand what the seller maybe thinking when considering multiple offers.
By R. Jones
