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When Do You Know What Your “Highest And Best” Offer Is?

Mar 30

filed under: Buying A Home, Foreclosures & Short Sales, Real Estate

When Do You Know What Your Highest And Best Offer IsOK so here is the scenario for my most recent multiple offer situation. Property is in Fountain Hills and is listed at $226,710, great location, super lot, views, pool etc. This is a two bedroom, 2 bath, 2233 SF home on an acre lot built in 1980. Sounds pretty good huh, our thoughts exactly along with the swarms of other agents and their clients who were all salivating over this one.

My client, who really wants this property has an inspection prior to putting in his offer. We think that’s a good strategic move to go in waiving the inspection since we had it in advance. By the way we are also going to waive the appraisal,  we knew the property would appraise for our offering price and if for some reason it did not, my client would live with it. Anyway the inspection revealed that the property needs a new roof and a new AC. So right off the bat we’re looking at $20,000. Oh and did I tell you the home needs complete updating?16837 E. Lunar Fountain Hills, AZ

When we are ready to submit our offer the listing agent informs me that based on the interest in this property and the number of offers he is expecting to come in, he would like us to submit our “highest and best” offer. Basically one bite at the apple now. So our offer goes in substantially over asking price, again no appraisal contingency, no inspection contingency, cash and we will close in 20 days.

Now I have to tell you much counseling took place with our client prior to coming up with a “highest and best” figure. We had to factor in the cost of the new roof and AC plus the updating figure. What you need to know is that when you are submitting a highest and best offer for all intent and purpose you are bidding against yourself. You don’t have a clue as to what the other offers are. In some situations comps are available to give you some guidance. In others, such as on this particular property comps were not plentiful. Frankly I can’t figure out how the listing agent even came up with the asking price of $226,710. What is up with that number?

Well we waited over the weekend only to find out on Monday that my clients did not have the highest and best offer. Disappointment alone doesn’t cover the feelings my client has knowing he  “lost” the property. His feelings include frustration because at this moment he doesn’t even know how much higher the offer was that was higher than his. Then there is the  feeling of drudgery knowing he has to start the looking process all over again, and finally ” remorse” for not having gone even higher with his “highest and best” offer.

I think its the remorse that gets me more than anything. I’m sorry he did give it his highest and best. Highest and best is not going to be the same for everyone in this situation.  I’m sure there were offers that were less than his for this property. And its obvious that someone else’s highest and best was higher than my clients.

Had my client gone higher, what would that figure have been and then would it still have been high enough?  That is something we will have to wait to find out when the property closes escrow.

Written by Howard Harris