In the current New Orleans real estate market, you will likely find yourself in many bidding wars trying to get a new home. When these bidding wars happen, most real estate agents will ask for “highest & best offers” by a specific time. Many potential homebuyers get freaked out by this and begin to panic. No need to freak out! Let us explain further:
What is highest and best?
When your real estate agent lets you know that all offers are due on Sunday at noon and bring your highest and best offer, you may wonder what this means. This is the time for you to offer as much as you are comfortable with to “win” the bidding war.
I always tell clients that if you lost the house by only $200, you would feel ok because you offered the most you were willing to pay for that home.
“Highest and best” doesn’t mean just the highest price – but it applies to all the other factors in the contract. Financing contingencies, the act of sale date, your inspection period, home warranty, and appliances are just some of the factors that make or break a deal.
Your agent should ensure that you’re not asking for the refrigerator if the seller has no intentions of leaving it behind. You may think this isn’t a big deal, but in the middle of a hot market and sellers receiving 10-20 offers on their home, IT ALL MATTERS!
Is the highest offer the one that always wins?
Surprisingly, no, the highest offer does not always win.
Our agents could tell you many stories about why a seller has not chosen to accept the highest price! Here are some of the reasons:
- The buyer offered SO MUCH higher than the list price that we knew it would never appraise. The seller did not want to re-negotiate later.
- The closing date was not what the seller wanted.
- The buyer asked for items they knew were not staying with the house
- The buyer asked for too much in closing costs [Important Reading: What are closing costs?]
- The buyer asked for ANY closing costs.
- The buyer’s agent didn’t fill out the contract properly
- The buyer asked for too many inspection days
- The buyer had an out-of-town lender [Link for a local lender, so this doesn’t happen to you!]
Now, to be fair, this doesn’t happen every time. But there are some of the reasons we had sellers reject offers previously!
How do I know what the seller wants?
Your real estate agent should call the listing agent and find out if they have a preferred closing date, do they need to lease back the property, do they plan on leaving any appliances, etc. Your real estate agent should make sure they have read all the attachments and remarks provided by the seller’s agent as well.
Agents who do not look at all the provided info tend to make sloppy offers that won’t help you win a bidding war!
If it’s not always price, what are some reasons a seller has chosen an offer over another?
Some of the reasons a seller chose an offer over the highest priced one:
- Buyers allowed them two weeks after the closing to move out
- Offering to pay the seller’s closing costs
- Agreeing to pay an appraisal gap
- Waiving an appraisal
- Offering to remove items from the house (works well when the owner is deceased and the kids are selling the home)
- The buyer seemed flexible & easier to work with
- The buyer stated they would not ask for repairs
Sometimes, it does just come down to price, though. And, no, we do not know what the other offers are.
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