For several months my husband and I have been house hunting; we made two offers which weren’t accepted. The last home had five offers and we were told to come up with our “highest and best price”. It was so confusing, what did the seller actually mean? Does that indicate they won’t accept a full price offer? Why don’t they just name a price? We didn’t get that home either, and are hoping you can elaborate. J & D
What does highest and best price mean?
Dear J & D,
I know that this is a very contradictory market. Although interest rates are low, it’s hard to qualify for a loan. Homes are more affordable but there is a serious shortage of inventory and well qualified buyers are competing for an extremely small pool of listings.
Let’s assume that the asking price of the home is $699,000 and the seller counters each buyer at $699,000. Maybe half the buyers agree to that price and the seller now will likely accept the offer with the largest down payment, or other terms preferable to them. But maybe one savvy buyer thought this through and decided that he would come back with a purchase price of $701,550 and likely top most of the other competing buyers.
Or, perhaps the seller already had a full price offer and wanted to find out if he could get an even higher selling price. I agree with you that “highest and best price” can be confusing. But whether the seller counter offers full price or highest and best, the seller is still looking for the best offer (price and terms).
The next time you find yourself competing with other buyers, try to improve the terms of your offer. When I am representing a buyer, I try to find out the seller’s circumstances and what might appeal to them (other than more money). If it’s a vacant home, perhaps you can accept debris left behind. If the home is occupied by long term owners, you might consider allowing them extra time to move.