✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
Every home received an average of 3.5 offers in April 2024. Additionally, 27% of homes got sold above their asking price. This suggests that the highest and best offer strategy is boosting sales in many areas, ultimately benefiting the sellers.
Multiple offers are becoming increasingly common. Sellers with multiple bids often ask buyers for their highest and best offer, requesting their top terms and price. This helps sellers choose the best deal and streamline the process.
Flat Fee MLS agencies can help you with various negotiating strategies for you to consider. With Houzeo, you can easily navigate the complexities of multiple offers. We assist you in negotiating highest and best offers to ensure you get the best deal.
What Does Multiple Offers Mean?
A multiple offer situation occurs when several buyers express interest in your property simultaneously. As a result, you get more than one offer. You can attempt to negotiate with the buyers individually but that can be exhausting and tiring.
You can instead choose an easier option. Ask all buyers to submit their highest and best offer within a limited time. This will spark competition among buyers, prompting them to submit their best and final offer. You can then analyze and choose the the best suited offer for you.
What Are “Highest and Best Offers” in Real Estate?
In a multiple offer scenario, sellers use the “highest and best offer” tactic to streamline the process and maximize returns. Sellers set a deadline for buyers to submit their final and most competitive offers. This creates urgency among buyers signaling that their offer isn’t the only one.
By asking for the “highest” offer, sellers encourage buyers to raise their prices. The “best” component hints buyers to improve other terms, like contingencies, putting down more cash, or offering a flexible closing date.
This approach helps sellers quickly identify the strongest overall offer. It can lead to a faster sale and potentially a higher final price.
For Example:
You have listed a house at $500,000 and you are approached by 3 buyers.
| Buyer | Offer | Contingencies | Closing Period |
| A | $525,000 | No | 30 days |
| B | $520,000 | No | 45 days |
| C | $530,000 | Yes | 60 days |
In this scenario, Buyer A presents the highest and the best offer.
The offer is not only above the asking price but it also comes with no contingencies, which reduces uncertainty for sellers. Additionally, Buyer A proposes the shortest closing period, which means the transaction can be completed quickly.
In contrast, while Buyer C presents the highest offer, It includes contingencies and requires a longer closing period. These factors add complexity and potential delays to the transaction. This makes their offer offer less attractive.
So, when you compare all offers, Buyer A stands out as the top choice for sellers.
- Highest and Best vs. Best and Final Offer: “Best and Final” offer is a buyer’s last, most attractive proposal in a negotiation. The buyer offers the maximum price and most favorable terms with no intention to negotiate further.
How to Compare Multiple Offers as a Seller?
In multiple offer situations, you can compare them effectively by using the following metrics:
1. Flexible About the Closing Timeline
Most sellers prefer buyers who are flexible with the closing date. Buyers flexibility about the closing date will allow you to have more control over the transaction. This will ultimately let you decide how you want to go about the closing process.
2. Contingencies
When you get multiple offers, it’s important to scan for contingencies. These contingencies can cause buyers to cancel the sale at any point. Few contingencies during which a buyer can call off the sale are listed below:
- Home Inspections Contingency: During home inspections, if the buyer uncovers damage or issues with the property, they can retract their offer. To avoid this, you can submit a pre-listing home inspection report at the time of showing.
- Home Appraisal Contingency: A home appraisal contingency can impact the sale if the property’s appraised value is less than the agreed-upon purchase price.
Remember, the best offer for you may not always be the one with the highest price. Compare all offers on the basis of various contingencies, and then choose the one that aligns with your selling goals.
3. Pre-approved Buyers
Among all the offers received, you need to first check if the buyer is pre-approved. A mortgage pre-approval shows that the lender has checked the buyer’s financial stability. This helps assure you’re dealing with a serious buyer.
It is a simple process to qualify for a preapproval mortgage.
4. Cash Offers
When you are in a rush to sell your home, requesting cash offers can speed up the process. Cash offers usually close within 15 to 30 days. Additionally, you don’t even have to stress about the buyer’s finances or mortgage approvals.
However, institutional cash buyers may offer as little as 50% of the property’s fair market value. To attract more competitive cash offers, consider listing your home on cash marketplaces. This can attract multiple cash buyers and stimulate a bidding war among them.
5. Negotiate Closing Costs
As a seller you have to look for buyers who are willing to negotiate closing costs. This will help your sale be more streamlined. There are some buyers who are willing to negotiate and add the equivalent amount to the final price. This will thereby reduce some financial burden on you.
5 Tips for Handling Multiple Offers on a House
Navigating multiple offers on your house can be both exciting and challenging. When several buyers are interested in your property, you need to have a strong plan to get the most out of the sale and make sure everything goes smoothly.
Here are 5 simple tips that will help you handle multiple offers on your house:
- Have Clarity on What You Need: Be clear on whether you want monetary profit or a quick sale.
- Prepare Your Marketing Strategy: Prepare your home for staging and marketing so that it captures the attention of potential buyers.
- Be Responsive: Make sure you respond to the offers quickly and not miss out on buyers. However, you are not obliged to reveal your offers to any buyer.
- Trust Your Instinct: Evaluate the integrity of the offer and the buyer. If not, you might disregard good offers.
- Sell For Sale By Owner: Selling your house without a real estate agent can be beneficial when dealing with multiple offers. It gives you more control over the process and also helps you save money by avoiding commission fees.
Is There a Time to Avoid Highest and Best Offer?
Yes, in a slow market, it’s best to avoid the highest and best tactic, when buyer demand is low and inventory is high. Before receiving multiple offers, asking for highest and best can put unnecessary pressure on potential buyers. It can deter potential buyers and reduce offers.
Additionally, in a market with limited buyer interest, accepting the highest offer upfront may not be practical. It could lead to the property sitting on the market for an extended period. However, direct negotiation can help meet specific needs like a quick closing or particular contingencies.
Why You Should Counter an Offer?
As a seller, you can accept the offer, reject it, or counter it. Counteroffers are made by the seller in response to the buyer’s initial bid.
It also means the buyer is interested in the offer and the deal can go through with some changes. These may include changes in the price, contingencies, and closing date among others.
Some of the benefits of a counteroffer are:
- You Can Get Better Prices: Your home sells for a better price if your counteroffer is accepted. You can walk out with a good profit.
- Closing Date Can Be Your Choice: Flexible closing date is lucrative to buyers, as you feel less rushed.
- You Can Review the Terms of the Deal: A counteroffer might help revisit the terms of the agreement, should the terms change.
- ✍️ Note: When you counter an offer, the original one becomes void. Depending on your state laws, you can only counter one negotiation at a time.
Is “Highest Offer” the “Best Offer”?
To understand and navigate multiple offers, particularly through the “highest and best” offer strategy, is a critical aspect of the real estate selling process. This tactic helps sellers choose the best offer among competing bids, considering both price and terms.
The highest and best offer approach might help you close the sale quickly. You can get a better deal with no liability or a flexible closing date. The strategy is “highest and best”, not just highest. Do not be fooled by high prices. Rather, go for a deal closed on time with fewer obligations.
With the assistance of professional resources and platforms like Flat Fee MLS agencies such as Houzeo, sellers can confidently manage the complications of multiple offers, ensuring a smooth and efficient selling experience.
» Houzeo Reviews: Check out why more than 8,000 home sellers have rated Houzeo 4.9 stars out of 5 on Google Reviews and Trustpilot.
Here’s How Houzeo Can Help You Manage Multiple Offers
Houzeo Offers can help you from negotiations to managing multiple offers. Check out this video to know more.
How to List on MLS With Houzeo?
5 Easy Steps to List on MLS with Houzeo as FSBO
» Need More Clarity? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.
Frequently Asked Questions
How to compare multiple offers as a seller?
In multiple offer situations, you can compare them effectively by scanning contingencies and making sure the buyer is pre-approved. There are other metrics as well that can help you compare multiple offers and make the right decision.
What does highest and best offer mean?
When several buyers compete for the same property, they send in offers to stand out among multiple offers. As a seller you can request the buyers to send in their best bid and then choose the highest and best offer.
Is highest offer the best offer in real estate?
No, highest offer does not always mean the best. You can look at this example to understand that the "best" component hints buyers to improve other terms, like contingencies, putting down more cash, or offering a flexible closing date.
