In a market where there is low inventory of homes, multiple offers and bidding wars may erupt.
When a Seller receives multiple offers, they may ask all Buyers for their ‘highest and best’ offers. This can be the most efficient way for a Seller to select the offer that works best for them.
For a Buyer, this can be stressful and frustrating. Although this may be the case, the highest and best scenario does give all Buyers an equal opportunity to have their offers considered.
If you are a Buyer, there are several steps that you can follow to improve your chances of coming out on top and getting your offer accepted.
Work with an experienced Realtor– Work with a Realtor who knows the market well and understands and shows you the comparable properties. Your Realtor should know how to best position your offer and advocate on your behalf.
Mortgage pre-approval– If you are obtaining financing, make sure that your mortgage pre-approval or approval letter is current and dated within the last 90 days. When placing an offer you will need a current letter. Keep in mind that you may not have time to contact your Mortgage Broker to get an updated letter and may lose out on a property.
Give it your best shot– Don’t waste time with unrealistic lowball offers. When it comes to a highest and best scenario, give your best offer and don’t hold back thinking you may have another chance to increase your offer. This may be your only opportunity so don’t lose out.
Be flexible with the terms– If you can, put down a larger earnest money deposit, or decrease the inspection period, or not ask the Seller to pay for closing costs…these are all things that can strengthen an offer.
Don’t be too demanding– Sellers typically prefer a Buyer who is easy to work with and does not ask for too many contingencies. Making demands or adding contingencies can work against you in a competitive situation. Try to limit your requests to what is absolutely necessary.
Introduce yourself to the Seller – Many Sellers have an emotional attachment to their home and hope the Buyer will love their home as much as they have during their time of ownership. Have your Realtor let the Seller or Seller’s Agent know how thrilled you are at the prospect of purchasing their home and include this with your offer.
Ask to be back up – An offer accepted in a highest and best situation does not always lead to a signed contract. If your offer is not accepted, have your Realtor let the Seller’s Agent know you remain interested and request to keep your offer as a backup offer.