Let's Talk About Highest And Best!
The Royal Rumble. The craziest night of professional wrestling. And if you're looking to buy into this madness that is the NJ housing market, this might be just how it feels. Although it feels like you are in a "last man standing" situation, fear not...wielding a steel chair won't help you...but knowing what best and highest actually is, will!
So, first off, let's discuss what it is. When multiple offers are received the seller and their agent have a couple different ways they can handle it. Normally, you can accept or counter. But if you have 5 offers, you may not want to go through the hassle, and simply say "bring your highest and best". The listing agent has to accompany that with a date and time the highest and best is due by. Offers in after that? No go.
This component is SUPER critical, as in a normal real estate transaction, once an offer is accepted and it goes to attorney review, the offer can still be knocked out if a better offer comes in. Here, it's done. Once the offer is accepted, no other offer will be entertained. The others can remain in backup position, if they so desire.
What are homeowners looking for in highest and best?
Well, obviously, highest dollar figure, duh. But that's often, and especially in this market, not the most important factor.
Down payment. With appraisals all over, and most homes selling over appraised value, sellers want to know you are putting down a healthy amount where appraisal won't be a huge issue.
What are you waiving? In keeping with the talk about down payment, maybe you want to put that cash to good use and waive your appraisal contingency? This would leave the seller at ease knowing that an appraisal short $20,000 won't derail the deal. Buyers are also waiving home inspection contingencies, where if they are planning on getting an inspection, saying "Home inspection is for informational purposes only" meaning they can not renegotiate and/or kill a deal over what the inspection turns up.
Last, a flexible close date. As good as your offer looks to the seller, it won't look very good if it might leave them rich but homeless. Offer your seller a closing date that works for them, at their pace.
That's the basics on what it is, and how it works. With a little planning, and some serious courage, you can turn almost any highest and best into a winning situation for both you and the seller!
Until next week,
Chris & Nikki