Even if there are indications that the housing market is beginning to cool down from the record-high prices it has experienced over the previous several years, bidding wars for houses are not even close to being ended, particularly in locations that are very competitive. And the difference between getting your ideal house and having to start all over again might be anything as little as a simple misunderstanding or misinterpretation of real estate language. This is something that happens all the time.
Bidding and the Real Estate Market
Take, for instance, the subtle distinction between the words “highest and best” and “best and final,” which are used to describe the sorts of bids a buyer makes on a home. These phrases are both used to refer to the highest and best offer that a buyer may make. In preparation for, or in the midst of, a bidding battle, many homeowners are requesting that prospective buyers make one of two distinct kinds of bids.
Do you have absolute certainty that you understand the distinction between these two kinds of deals? Continue reading for a description of the term, as well as advice from seasoned real estate professionals on how to put your best foot forward and purchase the house that has captured your imagination.
What Does it Mean for an Offer to be the “Highest and Best”?
The real estate market is a complicated place if you don’t know what you are doing. The intention behind a seller’s request for a buyer’s “highest and best” offer is almost always to start a bidding war and play prospective bidders off of one another. Melissa Dorman, a real estate broker with Living Room Realty in Los Angeles, California, says that when she sees a seller asking for “highest and best,” she interprets that as code.
When doing so, it is common practice to accept the property in its current condition, which provides little space for further discussion once an offer has been accepted. Do you plan to purchase a house? Make your search as specific as possible in order to locate the house of your dreams.
What Does it Mean for a Home Offer to be Final?
When a seller makes a request for a buyer’s “best and last offer,” it indicates that the seller is eager to close the deal quickly and is not interested in engaging in drawn-out discussions. Sellers want to be in and out of the buying stage they don’t want to know everything there is to know about the real estate market.
It is not an easy endeavor, but if a solid strategy is in place, it is possible to triumph over fierce competition and win a bid without experiencing regrets in the future. According to Ian Katz, a licensed real estate broker with Compass in Los Angeles, “They need to find out what the seller considers to be the most significant factor in a successful offer other than the price. In circumstances like these, it is important for a buyer’s agent to do all they can to find out what will make the transaction successful.
Techniques for Making the “Highest and Greatest” Offer Possible
For instance, would the seller want a rent-back agreement after the closing in the real estate market, which would imply that the buyer would not be allowed to move into the property immediately after the transaction has been finalized? Or, is the seller ready to get rid of the property and searching for a buyer who is able to make an offer with a rapid closing in less than thirty days? Gregg Cantor, president of home building and renovation business Murray Lampert Design in Hollywood, believes that “cash is king” and that it may often clinch the sale, even if rival bids are somewhat higher. Murray Lampert Design is located in Hollywood.
If payment in cash is not possible, he suggests providing a letter of pre-approval from a financial institution and maintaining an optimistic attitude at all times. Cantor recommends that prospective buyers refrain from bringing up any problems with the property until after their offer has been approved.
Techniques for Composing a “Best and Final” Offer
An escalation clause is something that Glen Henderson, a broker associate with Market Premier Homes Coronado in Echo Park, suggests adding for bids that are described as “best and final.” When purchasers provide a range of pricing and state that they will surpass any other competing figure by a certain amount, for example, $5,000, this is known as an escalation clause.