When a seller asks for your highest and best offer, you typically have one shot at getting the seller’s attention. These tips can help you outpace the competition and clinch the deal.
1. Enlist The Help Of A Skilled Real Estate Agent
A real estate agent is vital to the home buying process because of their knowledge of the real estate market and ability to negotiate on your behalf. They can provide information on the seller’s preferences so your offer hits the mark. For example, the seller might want to close as fast as possible or prioritize cash offers. Your real estate agent can facilitate communication and help you present your offer in the best light.
The point of highest and best offers is for the seller to see which offer is the most desirable. Make yours irresistible through the following strategies:
Make a cash offer, if possible. Cash means speedier closing since a lender isn’t involved on the buyer’s end. Even if the offer is lower than others, a cash offer is more attractive because it requires less hoop-jumping to get to the closing table.
Offer a large earnest money deposit to let the seller know you’re serious about the home. A sizable earnest money deposit means you’re dedicating your financial power towards this single deal instead of putting offers in on multiple homes. It also shows you have the means to close the deal and possibly go above the asking price. A typical earnest money deposit is 1% to 3% of the purchase price, so doubling that can make you stand out from the competition.
Offer concessionsto help the seller. For example, the seller usually pays about 6% of the purchase price as a commission for the real estate agents involved. Picking up this expense means you may pay thousands of dollars more than the purchase price but could land you the deal in a seller’s market. Other concessions include paying off the remainder of the seller’s mortgage and the seller’s attorney fees.
Fine-tune your contingencies based on your knowledge of the situation. For instance, you could delay the move-in date a few months if the seller wants ample time to move. In addition, if the house has outdated appliances, you could foot the repair bill instead of asking the seller to pay. You can also cancel the appraisal contingency, meaning you’ll pay a specific amount of cash – out of pocket – above the appraisal value to sweeten the deal.
3. Get Your Initial Mortgage Approval
If you can’t make a cash offer, don’t panic; most buyers need a mortgage to finance their purchase. Plus, you can turn this dynamic into an advantage by going into the home buying process with your initial mortgage approval in hand. Your approval letter means a lender has agreed to provide you with a mortgage loan.
This document can give you the upper hand against buyers waiting for their financing to come through. Because sellers generally don’t want to wait on mortgage approvals and risk the deal falling through, they’ll typically pick a buyer with mortgage approval over a buyer without approval. In other words, a sky-high offer without mortgage approval is vulnerable to rejection by a lender, putting the sale in jeopardy.
4. Consider Including An Escalation Clause
An escalation clause can help you stay in the running if your offer isn’t higher than your competition’s. You can set a dollar amount for your escalation clause to surpass other offers. For example, say you offer $250,000 on a home, but you’re concerned another buyer is offering a thousand more. So, you include a $5,000 escalation clause, meaning you’ll go as high as $5,000 more than any other offer. You can set a ceiling for your escalation clause so you don’t accidentally commit to beating a $300,000 on the home (unless you’re comfortable with that price).
5. Respond As Quickly As Possible
Sellers are looking for responsive buyers who move fast on the home. As a result, a seller might sour on the offer with the highest price from a buyer who drags out communications. In addition, if the seller is unsure which offer they like best, your speedy communication can help make the seller’s choice easier.
As the seller, you usually ask for the highest and best offer to eliminate negotiations and expedite the deal. It lets buyers know you're looking for only the most serious offers. Conversely, with a best and final offer, you're asking buyers to go above and beyond the competition to convince you to sell to them.
The highest and best use of a property determines its utility to a potential purchaser. A purchaser will pay no more for a property than a competing property with the same utility would command, while a seller would accept no less than another seller of a comparable property.
“Highest, best, and NOT final,” means that once a buyer has been outbid, the listing agent notifies each buyer, giving them a new deadline to meet the current offer, or pull their offer altogether. This can go on for a number of rounds until there's one buyer left, or the seller accepts an offer.
Sellers can accept the “best” offer; they can inform all potential purchasers that other offers are “on the table”; they can “counter” one offer while putting the other offers to the side awaiting a decision on the counter-offer; or they can “counter” one offer and reject the others.
Well, that's not the case. Securing the winning bid on a house isn't always as straightforward as accepting the highest dollar amount. In our experience, there have been countless scenarios where the highest offer wasn't the one accepted by the seller—This is because the highest offer isn't always the strongest buyer.
Can You Negotiate After a Best and Final Offer? The seller can reopen negotiations after best and final offers have been selected. Most often, the seller will select the most interesting offer and negotiate directly with only the top bidder.
Best Offer lets you offer the seller a price you're willing to pay for the item. The seller can accept, reject, or counter your offer by suggesting another price. Best Offer is a great way to buy the item you've been looking for at a bargain price.
If you want to increase your chances of selling an item, you can add the Best Offer option to your listing. This option allows you to negotiate the price with potential customers.
A best and final offer might also be requested if a home needs to be sold very quickly. Rather than going through the process of getting multiple rounds of offers, the seller might state upfront that they are looking for best and final offers only in hopes of expediting the process.
Asking for a best and final offer signals that a seller isn't interested in a prolonged negotiation. They want everyone to make the offer by a certain date and time, so they can pick the best one in their eyes.
All too often sellers will be very adamant when a listing first comes on the market. Activity is good and the home seller is feeling confident. Go back to when your agent gave you pricing on your home. A real estate agent will give a range that a home is worth.
There's no reliable formula here. Typically, a low-ball offer is at least 15% to 20% lower than the asking price: offering $240,000 on a home valued at $300,000, for example. But sometimes a seller may be asking too much. If you can back up your offer with market data, you're making a serious offer.
The amount you may want to reduce your home's asking price depends on many factors, including the median price in your area, what comparable homes nearby are selling for and the length of time the home has been on the market. According to a Zillow study, the average price cut is 2.9 percent of the list price.
You want to give the employer an opportunity to make a higher offer without pushing too hard. The rule of thumb when you negotiate salary with a counteroffer is between 10% and 20% of the offer amount.
A highest and best offer request is usually made when a seller has received multiple offers on their home and asks all prospective buyers to submit their most attractive bids within a specific time limit. Once the seller has received all the offers, they will review them and pick the best one.
A best and final offer might also be requested if a home needs to be sold very quickly. Rather than going through the process of getting multiple rounds of offers, the seller might state upfront that they are looking for best and final offers only in hopes of expediting the process.
When homebuyers are told to submit their “highest and best offer” the listing agent is indicating that there are multiple offers on the property and that all interested buyers should submit their best possible offer.
Introduction: My name is Msgr. Refugio Daniel, I am a fine, precious, encouraging, calm, glamorous, vivacious, friendly person who loves writing and wants to share my knowledge and understanding with you.
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