Bidding Wars and Highest and Best Offers in Real Estate

    Fighting RealtorsYou have a real estate agent. Your real estate agent may have written offers with you.  After you having your real estate write an offer on a piece of real estate that is for sale, they may have told you that there were Multiple Offers that have been received.

    To clarify, that means that more than one person had written an offer on the same property you had interest in.  At least one.  There may be Several, we have had in excess of 23 offers written on one of our hottest bank owned listings in 2011.  What a nightmare.

    Instead of “rejecting” the lowest offers and those with “not so solid” financing(typically done), we countered everyone back that had submitted an offer.  We did this because we did not want to exclude any of the buyers that may have been misinformed by their real estate agents.

    Once you see the Counter Offer from the Seller, that is when things start to be understood.  Mostly the counters specify terms, clear up “items for possession”, and talk about deadlines, the waiving of contingencies, and inspection time frames.  Besides these things, they give a time when a buyers “Highest and BEST” offer should be submitted by.

    What is Highest and BEST?

    Highest and Best refers to two different things.  The “Highest”, would be the most amount of money the seller will be able to have as their Net Profit, after all is said and done.  The “BEST”, has to do with financing.  The BEST place any Seller can be, is with an all cash offer on their real estate for sale that “nets” them the most profit.  Lesser then cash would be conventional, then FHA, then VA(listed in their order of respect by most sellers).

    The bidding war has officially started:

    Believe it or not, some banks mandate a specific time frame before they will view any of the offers that were submitted.  That equates to most bank owned properties having to be active on the market for sale, being marketeted, for a specific amount of time.  In some cases, we have experienced 7 days, 14 days and 21 days of “lead time”, with regard to the properties the banks, and even Human Sellers, are selling.

    The main reason is to get into a Multiple Offer Scenario – Highest and Best counter – on the property that is for sale.  To create a “Feeding Frenzy” as you might by throwing “chum” into the sea to attract sharks.

    Best Advice:

    Know the comps, get price points and values in the specific area where this property resides.  Find out how much the last several sold for and from that amount deduct any concessions to get a more realistic price point.  Don’t exceed these amounts when you have been countered with a Highest and BEST.

    Always have your line in the sand, the price point that you will not exceed.  You may not get the first home you write an offer on, but with keeping to this rule, you will get one eventually and it’s mortgage payment won’t break your back!

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    Paris and Connor MacIvor

    Connor and Paris MacIvor are in the Top 1% of Realtors Nationwide, starting their real estate business in 1998 with RE/MAX Gateway - Santa Clarita Valley and Valencia CA. Their becoming licensed real estate consultants and representatives came from the horrible experience they had when they bought their first home. There were many things that the agent they had hired did not explain and disclose, which per law he should have. Getting that agent on the phone after they closed escrow and after he had gotten paid was impossible. Paris and Connor called the broker, the board of realtors, the office manager and all they received was the promise of a phone call back. The remedy did come, but not as fast and in the way they wanted. That act - that bad agent was the reason why Paris and Connor became Realtors. That was all they needed to vow to never let the same fate befall anyone else, that befell them. Today Connor and Paris are focused on client service. Protection and top-shelf service with regard to their real estate clientele. They primarily work within the Santa Clarita Valley and Valencia CA. However, for a referral, where 80+ of their business is referrals they have License and Will Travel to other parts of Ventura County, Los Angeles County, and Orange County to handle real estate transactions for those who trust their real estate operation. Writing on their Real Estate Blog is a passion. SCVnest.com/blog is where you will find over 10,000 real estate articles. Go to SCVnest.com/radio to listen to their latest real estate radio broadcast.

    6 Responses to “Bidding Wars and Highest and Best Offers in Real Estate”

    • Mary Lynn Durfee

      Written on

      We made an offer. The Agent/Bank came back and said multiple offers, submit “highest and best offer” by 11am Monday. We did. We won the bid – then the bank countered our winning “highest and best” and we said we already submitted our highest and best as demanded and won and rejected their counter. This evening (19 hours later) their Agent calls and says they declined our offer and now the lower bidder is going up. Is there any accountability to banks (fraud, deception) in saying “highest and best” and then countering to a lower bid to try to get more? Or, can they play this game forever to get as much money as they want? Is the Listing Agent accountable for being a party to this kind of fraud and corruption?

      Reply
      • paris911

        Written on

        Very typical. Make sure you don’t exceed your own “rule”. Too many buyers go above their comfort zone when infected with the “bidding wars”. The other thing to inquire to your realtor will be about potential appraised value. If they can give you the intel about that – depending on your type of loan, and if you don’t waive your appraisal contingency, you may be good if the home appraises for less.

        Reply
    • LastStand

      Written on

      Total ‘legalized’ FRAUD with which RepoMax and agent participate and encourage. Deliberate lies.

      Of course, they’ll tell you they can’t tell you the numbers in the other offers … because usually they don’t actually exist. The Agents are there FOR THE SELLER and maximizing the selling price and therefore their commission. YOUR expense under the FACT that it is usually a total lie.

      Picture the agent laughing and snickering at you behind your back after they tell you they need your “highest and best” because of other offers. They KNOW they put you in the pressure cooker. It is deliberate to squeeze more money out of you and your desires for the property. At the end of it all, the Seller can simply say “no deal” anyway. NOW do what you KNOW is right.

      Reply
      • paris911

        Written on

        Another reason against Dual Agency. Thanks for your “potent” comment LastStand. Much appreciated – Connor

        Reply
    • John Poltrock

      Written on

      Great article! I’m doing a but of leg work now to write an article on our blog about highest and best. I love seeing a fellow RE/MAX agent in the top 10 google. Good work as always! 😀
      John Poltrock

      Reply

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