Highest & Best

The West Michigan real estate market is heating up. More buyers are in the market and there are few homes to buy. Simple supply and demand laws prove that this creates competition. Economic laws aside agents and buyers are finding themselves in the position of being one of multiple offers on the same property.  Sellers are unsuspectingly being put in the position of multiple offers in a short amount of time.  Multiple offers usually means, “Highest and Best”.

So what is ‘highest and best’?

Highest and best is a is when a Seller has multiple offers, and they do not want (or can’t) negotiate with each offer individually. The listing agent contacts all of the buyers and requests that each buyer submit an offer that will represent their highest and best offer. This typically means that the seller will not negotiate the offer any further once they’ve decided which offer to take. So, as a buyer, this means that your offer needs to be your best offer. You need to put your best foot forward and not leave anything on the table. If there was a dollar amount you had in mind, that you would be willing to go up to, then you should probably go right to that amount. This could result in you increasing your offer to an amount higher than the asking price. So then the question is, ‘How much above asking price do I go?’. This is the million dollar question.

Ask yourself a few questions…
-How bad do I want this property?
-Will I be upset if I miss out by $500, or $1000?
-Will I look back in 6 months and wish I had offered a little more?
-Will it appraise for what I’m offering?
-What, if anything, do we know about the other offers or buyers?
This isn’t an exact science. It’s a combination of putting all of the known facts on the table, including the subjective ‘how much do you want it’, then coming up with an offer that makes sense. Be confident in your offer. You should be able to “If I don’t get the property for the price I’m offering, I am OK with that. Any more and it’s not worth it.” The more confident you are in your offer, the easier it will be if you get the home, or if you don’t.