Multiple Offers: What Is “Highest and Best” Offer?

Sellers benefit the most when they have multiple offers. In this situation, the obvious choice is the highest offer. Thus “highest and best offer” is a strategy, that helps confused sellers make an easy decision.

While the highest offer doesn’t necessarily mean the best; other features of the sale should be taken into account. Factors like waived contingencies, flexible closing dates, and higher earnest money are crucial to consider.

It can be a challenge to negotiate and juggle between multiple offers. You should consider platforms that will help you manage.

What are Multiple Offers?

Sellers find themselves in multiple offer situations when more than one buyer is interested in their property. You can select the highest or the best offer and wait for someone to raise it.

When a property attracts multiple offers, it can create a competitive bidding environment among buyers. This can lead to potentially higher sale prices and better negotiating terms.

You should keep buyers updated on all your offers, to get them to improve it. Finally, you can counter whichever is the best offer and keep the rest as backup.

How to Compare Multiple Offers as a Seller?

Compare multiple offers effectively by using these metrics:

1. Flexible About the Closing Timeline

Sellers prefer buyers who are flexible with the closing date. They want buyers who can accommodate the time required to pack and move.

A flexible closing date lets you be more in control of the transactions.

2. Cash Offers

Cash offers are less likely to fall through. You need not worry about the buyer’s financial state or mortgage approvals. Although, institutional cash buyers can make offers as low as 50% of the property’s fair market value.

To attract more competitive cash offers, list your home on cash marketplaces. This will help you attract multiple cash buyers and create a bidding war among them.

3. Waive off Some Contingencies

These are some contingencies during which a buyer can call off the sale:

• Home Inspections Contingency: During home inspections, a buyer can take back the offer if there is serious damage. To avoid this, you can submit a pre-listing home inspection report at the time of showing.
• Home Appraisal Contingency: If the property’s appraised value is less than the purchase price, the deal can be called off. In case there is home appraisal contingency, you can discuss who eventually would cover the surplus in the loan.
• Home Financing Contingency: Mortgage contingency happens when the buyer is unable to get a home loan within 30-60 days from the day of closing. You can avoid this by choosing a buyer with mortgage pre-approval.
• Home Sale Contingency: Some buyers wish to sell their current house before they buy a new one. In such cases, the failure of one transaction affects the other. An alternative solution here would be to ask the buyer to bridge a loan.

Remember, the best offer for you may not always be the one with the highest price. Compare all offers on the basis of various contingencies, and then choose the one that aligns with your selling goals.

4. Pre-approved Buyers

A mortgage pre-approval indicates the buyer’s financial stability is verified. You can be assured that you are dealing with a serious buyer.

It is a simple process to qualify for a preapproval mortgage, a buyer who made the efforts is definitely competent.

5. Negotiate Closing Costs

A buyer willing to negotiate closing costs helps your sale be more streamlined. Most buyers are willing to add the equivalent amount to the final price.

You pay more in closing costs, including the agent’s commission. However, you can also deduct the amount from the home sale, whereas the buyer has to pay from his own pocket.

Why You Should Counter an Offer?

As a seller, you can accept the offer, reject it, or counter it. Counteroffers are made by the seller in response to the buyer’s initial bid.

It also means the seller is interested in the offer and the deal can go through with some changes. These may include changes in the price, contingencies, and closing date among others.

Some of the benefits of a counteroffer are:

1. You Can Get Better Prices: Your home sells for a better price if your counteroffer is accepted. You can walk out with a good profit.
2. Closing Date Can be Your Choice: Flexible closing date is lucrative to buyers, as you feel less rushed.
3. You Can Review the Terms of the Deal: A counteroffer might help revisit the terms of the agreement, should the terms change.

✍️ Note: When you counter an offer, the original one becomes void. Depending on your state laws, you can only counter one negotiation at a time.

5 Tips For Handling Multiple Offers On a House

Here are 5 simple tips to help you handle multiple offers on your house:

1. Have Clarity on What You Need: Be clear on whether you want monetary profit or a quick sale. In either case, be sure about what exactly you want.
2. Prepare Your Marketing Strategy: Prepare your home for staging and marketing so that it captures the attention of more potential buyers.
3. Be Responsive: Make sure you respond to the offers quickly to not miss out on buyers. However, you are not obliged to reveal your offers to any buyer.
4. Trust Your Instinct: Evaluate the integrity of the offer and the buyer. If not, you might disregard good offers.
5. Hire a Good Agent: Hire a real estate agent who has experience. But, make sure they are honest and responsive to you and the buyers as well.

What are the “Highest and Best Offers” in Real Estate?

Prospective buyers submit the “best and highest offer” to stand out among multiple offers. You can evaluate all the offers and pick the “best and final offer”.

For example, you have listed a house at $5,00,000 and you are approached by 3 buyers.

Buyer	Offer	Down Payment	Closing Period
A	$5,25,000	20%	30 days
B	$5,20,000	25%	45 days
C	$5,30,000	15%	60 days

In this scenario, buyer C has offered the “highest and best offer”. However, buyer A has better terms. It is advisable to pick a combination of price and terms.

How is it Different from “Best and Final Offer”? The last offer the buyer puts forth is likely non-negotiable. But with “highest and best offers” you can give counteroffers. Remember, the final step is always closing the deal.

4 Tips for Buyers to Submit Highest and Best Offers

The “highest” does not always imply “best”. Here are some other factors that can make your offer look better.

1. Fewer Contingencies: If you put less complicated “contingencies” in the purchase agreement, the seller might show more interest.
2. A Flexible Closing Date: Even with fast cash the highest bidder might not want to close at the convenience of the seller. Which will make your offer more favorable.
3. Be in the Loop: Do not be disheartened if you did not put in the highest offer initially. Through counteroffers, you can still catch the eye of the seller.
4. Be Responsive: Make sure you respond to the counteroffers quickly to not miss out on good properties. A diligent buyer has great appeal.

Here’s How Houzeo Can Help You Make the “Highest and Best Offer”

Houzeo Offers can help you from negotiations to managing multiple offers. Check out this video to know more.

» NEED MORE CLARITY? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.

Is “Highest Offer” the “Best Offer”?

The highest and best offer approach might help you close the sale quickly. You can get a better deal with no liability or a flexible closing date.

The strategy is “highest and best”, not just highest. Do not be fooled by high prices. Rather, go for a deal closed on time with fewer obligations.

As a buyer, you can still be in the game even if your offer is not the highest. Make sure to be alert and in contact with the seller.

Frequently Asked Questions

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