High Offer, Countered With “Highest and Best”

Rental Property Investor · Whittier, CA · Member since 2019 · 22 posts · 19 votes

Hello All,

I have been in the market for about 2 months looking at places, putting offers in an constantly getting outbid. I am a very patient person so this doesn’t bother me in the slightest. I recently found a place that was listed at 465k, I loved the area, it had all the amenities I’m looking for and then some. So, I put in an offer for 560k (pretty ridiculous I know, but I don’t think it will appraise that high) and now I’m being countered for a highest and best offer.

For reference an identical unit closed a week or so ago for 490k but was listed that it needs a little work. I also have an appraisal contingency in place for 10k over appraisal value. By no means am I an appraisal expert or anywhere close to one but I’d be hard pressed to see this place get appraised for over 540k if that.

I’ve decided to stand by my 560k offer cause quite frankly I think it’s a little absurd to go higher but I do love the property. Do you think the highest and best is just to squeeze a little more out of me even though that was essentially my highest and best?

Thank you!

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Will Fraser

Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes

Hey @Mark Abbate, I used to ALWAYS think that Highest and Best was a play to squeeze more out of the buyers until our local market started to heat up. At times that IS the agent or seller's intention, but one of the other affects of a call for Best and Highest offers is that when multiple offers are received (especially in the first few days on market) the listing agent will look at the number of showings scheduled on the home or the number of agents who have reached out to let them know that "an offer is coming, just need some time" and will call for Best and Highest in order to give everyone a shot at offering.

In reality B&H allows ALL offeror to go into the offer eyes wide open, aware that it is a competitive situation (duh, right? But seriously, it makes a huge difference with some buyers). It DOESN'T mean there is anything wrong (or right) with your offer. Do your diligence, know your numbers, and let those numbers tell the story.

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Forrest Faulconer
Real Estate Agent · Oklahoma City, OK · Member since 2020 · 471 posts · 462 votes
5y
Originally posted by @Mark Abbate:
Hello All,
I have been in the market for about 2 months looking at places, putting offers in an constantly getting outbid. I am a very patient person so this doesn’t bother me in the slightest. I recently found a place that was listed at 465k, I loved the area, it had all the amenities I’m looking for and then some. So, I put in an offer for 560k (pretty ridiculous I know, but I don’t think it will appraise that high) and now I’m being countered for a highest and best offer.
For reference an identical unit closed a week or so ago for 490k but was listed that it needs a little work. I also have an appraisal contingency in place for 10k over appraisal value. By no means am I an appraisal expert or anywhere close to one but I’d be hard pressed to see this place get appraised for over 540k if that.
I’ve decided to stand by my 560k offer cause quite frankly I think it’s a little absurd to go higher but I do love the property. Do you think the highest and best is just to squeeze a little more out of me even though that was essentially my highest and best?
Thank you!

Hi Mark, it is also good to keep in mind that money is not the only to bring to the table. I'm sure you know this, but some seller's like to see inspections or appraisals waived. If you came in with a strong offer AND waived the appraisal you would look pretty tasty in front of the eyes of the seller. However, if your play is to offer high, have that appraisal come in low, and renegotiate, that's a different story. The seller/agent may already see that coming too. My client was outbid recently because a strong offer came in with a waived appraisal.
Forrest Faulconer

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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
5y
@Mark Abbate EVERY realtor has the same BS LINE, " HIGHEST AND BEST" it seems thats what they learn in RE School........ Property on the market for 5 month you put in an offer, then all of a sudden, multiple offers, highest and best. Your offer was 100k over ask, it should have been yours.
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Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
5y
No contingency and in our State(CA). No mortgage approval. If you have viewed the property you are expected to present no inspection contingency and no appraisal requirements. Often buyer offer free stay for XX days until seller finds a place to stay after quick closing.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
5y
Originally posted by @Robert Campbell:
@James Wise of that’s all there is to it, then what is the service of the agent? Can we all just admit that we don’t need real estate agents anymore? What do they do? Regurgitate the contract? That’s admin stuff. I would be more than happy to pay agents $12/hr to forward emails and fill out the contract.

Nobody is stopping you from doing so bro. Knock yourself out. But coming up with a number you are comfortable with is something that many people rely on the agent to help them do. In addition, none of this has anything to do with the fact that the buyer, buyer's agent and everyone on this thread have no way of knowing whether or not the buyer's current offer is actually the highest offer or not.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Andrew Freed:
@Mark Abbate, @Will Fraser - Will had some solid advice. I agree, I would not get caught up in a bidding war. Run your numbers and offer what makes sense. If you truly like the asset and increasing the price by $10-20k would still make this property work from a numbers perspective then go for it. Otherwise, I would recommend sticking with your originally bid.

On a side note, did you include a personalized letter with your offer? I would recommend following up your bid with a personalized letter to humanize your offer in either case, which I have seen be very effective.
Orygun just came out with a bulletin on personalized letters as being potentially racist and to not use them.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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Originally posted by @Dennis Wayne:
No surprise here , it’s a game realtors and sellers play to screw you without accountability whatsoever ! There may very well be no other buffets at all and nobody has to prove it ! Realtors are like used car salesman. Their goal isn’t to find you a great home for a great price contrary to popular belief ! Their goal is actually to get you to pay the highest amount possible before you throw your hands up in the air and say $&@ it ! Don’t play their game . Run your numbers and buy solely based on that . If the highest and best is higher then walk don’t fall for their dirty tricks
Dennis while I really like most of your posts.. I just cant agree to this one.. that simply is not true or the real world.. I have been brokering real estate for 45 years owned multiple brokerages and what you describe is total fantasy LOL.. but any way.. carry on !

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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
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@Mark Abbate
You've got lots of comments here already. Let me just add its "not always about you." While it might have been nice for the sellers to just take your offer, its also nice for the other offerors to update their offer. I have so many clients who get upset at me when they aren't given the opportunity to negotiate --- yes, sometimes the sellers will just choose from the first round of offers.
Highest and best doesn't preclude negotiating. Agents can still talk to find out how best to structure the deal. Bidding wars generally wear out the buyers (as you can already see in this discussion thread). Hence, the highest and best approach.
Regarding the personalized letters, the National Association of Realtors and other associated Associations has already advised (or I think even more strongly) against it. Because of all the prohibited terms and its very nature, it is deemed discriminatory. At least when agents are involved, the decision of which offer should be accepted is based solely on the financial merits of the offer. Otherwise, its a violation of Federal anti-discrimation laws (take your pick).
Good luck.
1 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
5y
Originally posted by @Jay Hinrichs:
Originally posted by @Dennis Wayne:
No surprise here , it’s a game realtors and sellers play to screw you without accountability whatsoever ! There may very well be no other buffets at all and nobody has to prove it ! Realtors are like used car salesman. Their goal isn’t to find you a great home for a great price contrary to popular belief ! Their goal is actually to get you to pay the highest amount possible before you throw your hands up in the air and say $&@ it ! Don’t play their game . Run your numbers and buy solely based on that . If the highest and best is higher then walk don’t fall for their dirty tricks
Dennis while I really like most of your posts.. I just cant agree to this one.. that simply is not true or the real world.. I have been brokering real estate for 45 years owned multiple brokerages and what you describe is total fantasy LOL.. but any way.. carry on !

Having been involved in 1,000's of transactions and having had 70+ agents come and go through my brokerage in years past, I'd say the majority of agents in the business have the mindset of getting the deal done as quickly as possible. Not saying that's the correct course of action just what I've seen as to the majority's mindset.

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Mark Abbate
OP
Rental Property Investor · Whittier, CA · Member since 2019 · 22 posts · 19 votes
5y
@Jay Hinrichs
I really, genuinely hope that you aren’t being serious......
How can the simple notion of writing a letter to add more information about yourself and why you want to buy a certain property make someone racist? Mind boggling.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
Originally posted by @Dennis Wayne:
No surprise here , it’s a game realtors and sellers play to screw you without accountability whatsoever ! There may very well be no other buffets at all and nobody has to prove it ! Realtors are like used car salesman. Their goal isn’t to find you a great home for a great price contrary to popular belief ! Their goal is actually to get you to pay the highest amount possible before you throw your hands up in the air and say $&@ it ! Don’t play their game . Run your numbers and buy solely based on that . If the highest and best is higher then walk don’t fall for their dirty tricks
Dennis while I really like most of your posts.. I just cant agree to this one.. that simply is not true or the real world.. I have been brokering real estate for 45 years owned multiple brokerages and what you describe is total fantasy LOL.. but any way.. carry on !

Having been involved in 1,000's of transactions and having had 70+ agents come and go through my brokerage in years past, I'd say the majority of agents in the business have the mindset of getting the deal done as quickly as possible. Not saying that's the correct course of action just what I've seen as to the majority's mindset.

ya the idea that they can get another 5k for house so they can make a whopping 150 extra simply does not come into the thought process.
Only thing close to that I have seen agents go through MLS listings and concentrate on the ones with the HIghest BAC or co brokerage fee but this I have only seen once and that guy made 500k to 1 million a year in sales commissions and was / is a wild man. But in todays super tight market at least out here NO one is going to pass on a listing because the BAC instead of being 3% is only 2.5 or 2.2. We see them as low as 1% .. I know on my new construction we are on the low side for BAC since we end up having to hand hold the other agents clients most of the time.. And a few of the builders I know just put a number up not a % Like BAC is 9900 or 10,178.. you know how bad people are with math they cant figure out the % and they just look at it as Hey I cam going to make 10k thats fine.. I am going to do this on my next 60 houses I build in this one community.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Mark Abbate:
@Jay Hinrichs
I really, genuinely hope that you aren’t being serious......
How can the simple notion of writing a letter to add more information about yourself and why you want to buy a certain property make someone racist? Mind boggling.
I am totally serious and i just took my CA brokers CE and I think it was mentioned there as well.
Keep in mind the political environment we are in.. you know the systemic racism.. ??? be it white black yellow brown
Never know what kind of bias a seller will have.. that's the point our regulators who are out to protect the public are thinking..

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Mark Abbate
OP
Rental Property Investor · Whittier, CA · Member since 2019 · 22 posts · 19 votes
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@Charlie MacPherson
Ignorance and arrogance was definitely not what I was seeking out when I first wrote this post. I was genuinely seeking other people’s opinions and have clearly gotten them.
Being fairly new to real estate and still early in my business professional career, I just thought the negotiation process would be different. I understand that you are obligated to make your client money and advise them correctly but in my mind negotiation has always included an offer and then when there is a counter it includes a number, not highest and best.
However in this market I can see that having a ton of offers and ALMOST everything selling over list price that listing agents want to help get their clients the most money. Maybe I’m just being ignorant as well but I just wish the negotiation process was given at least a little more effort.
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Angelika Roerig
Rental Property Investor · Salt Lake City, UT · Member since 2020 · 16 posts · 12 votes
5y
Didn't read all the responses, and know you already submitted your highest & best. When we purchased our latest property we made an offer at asking and they came back the next day with the Highest & Best game, which threw us for a loop, not having purchased in a while. So we did offer more, but framed the offer so that we would only be $1,000 above the highest bid not to exceed xxx dollars. In the end, our full/asking price offer, was still the offer that won. They were just trying to get us to go bigger.. LOL.
Maybe that is something you can consider next time, should you miraculously not be the highest offer on this property!

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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
5y
@Mark Abbate
With today's political climate, just about anything runs afoul of the various Federal and State anti-discrimation laws. For example, even using the word "family" is considered discriminatory. As agents, we aren't even allowed to ask about "the family," only how many occupants/bedrooms are our clients looking for. Much of the personal information that would be included in the letter is considered discrimatory. As mentioned above, even a picture of the family is problematic because of "race or creed." If I recall my training correctly, only owner-occupied FSBO can choose whatever they want.
I had a beautfiul listing and forgot about this and mentioned about the "family" entertaining "friends" in the large, level backyard. That got flagged... Sitting on the porch enjoying the sunset watching the neighborhood got flagged... No point writing anything but, cold facts on my listings now.
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Mark Abbate
OP
Rental Property Investor · Whittier, CA · Member since 2019 · 22 posts · 19 votes
5y
@Jay Hinrichs
Well sadly we sent a letter to the seller with our initial offer so I might have some charges pressed on me here soon.
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Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
5y
FWIW, Highest and best is common in the commercial world and as already explained it is brokers/agents doing their job.....

But what I wanted to say is that if this is a place your are buying as your own personal residence I would give my highest and best using that as the reference point, and not if it cash flows, etc ....

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @David M.:
@Mark Abbate
You've got lots of comments here already. Let me just add its "not always about you." While it might have been nice for the sellers to just take your offer, its also nice for the other offerors to update their offer. I have so many clients who get upset at me when they aren't given the opportunity to negotiate --- yes, sometimes the sellers will just choose from the first round of offers.
Highest and best doesn't preclude negotiating. Agents can still talk to find out how best to structure the deal. Bidding wars generally wear out the buyers (as you can already see in this discussion thread). Hence, the highest and best approach.
Regarding the personalized letters, the National Association of Realtors and other associated Associations has already advised (or I think even more strongly) against it. Because of all the prohibited terms and its very nature, it is deemed discriminatory. At least when agents are involved, the decision of which offer should be accepted is based solely on the financial merits of the offer. Otherwise, its a violation of Federal anti-discrimation laws (take your pick).
Good luck.
YUP you can see it now.. you have a black family picture you have an Asian family picture you have a Hispanic family and their picture you have a same sex couple with their story and picture on and on and on. I mean there are so many news stories of discrimination in real estate especially in the black community this should be no shock to anyone.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Angelika Roerig:
Didn't read all the responses, and know you already submitted your highest & best. When we purchased our latest property we made an offer at asking and they came back the next day with the Highest & Best game, which threw us for a loop, not having purchased in a while. So we did offer more, but framed the offer so that we would only be $1,000 above the highest bid not to exceed xxx dollars. In the end, our full/asking price offer, was still the offer that won. They were just trying to get us to go bigger.. LOL.
Maybe that is something you can consider next time, should you miraculously not be the highest offer on this property!

thats called as escalator clause and many agents have never heard of it.. we were using those in Palo Alto Cupertino in the 80s..
I used them on all my highest and best.. and generally if I get the deal its for only 1k over the next highest its not like leaving 50k on the table. good call and good point on this thread. Bottom line though no one is forcing anyone to make an offer.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Mark Abbate:
@Jay Hinrichs
Well sadly we sent a letter to the seller with our initial offer so I might have some charges pressed on me here soon.
Wont be you it would be the agent.. you have no worries your the public you dont know.. AGents are paid to know.

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Mark Abbate
OP
Rental Property Investor · Whittier, CA · Member since 2019 · 22 posts · 19 votes
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@Jay Hinrichs
Our agent recommended an escalation clause on a previous offer and in this market, and especially on that specific property I deemed it risky. I didn’t want to be responsible to outbid someone else when I might not have the capital to do so. So I’ve just been sticking within my limit and getting outbid until the right property presents itself.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
Originally posted by @Dennis Wayne:
No surprise here , it’s a game realtors and sellers play to screw you without accountability whatsoever ! There may very well be no other buffets at all and nobody has to prove it ! Realtors are like used car salesman. Their goal isn’t to find you a great home for a great price contrary to popular belief ! Their goal is actually to get you to pay the highest amount possible before you throw your hands up in the air and say $&@ it ! Don’t play their game . Run your numbers and buy solely based on that . If the highest and best is higher then walk don’t fall for their dirty tricks
Dennis while I really like most of your posts.. I just cant agree to this one.. that simply is not true or the real world.. I have been brokering real estate for 45 years owned multiple brokerages and what you describe is total fantasy LOL.. but any way.. carry on !

Having been involved in 1,000's of transactions and having had 70+ agents come and go through my brokerage in years past, I'd say the majority of agents in the business have the mindset of getting the deal done as quickly as possible. Not saying that's the correct course of action just what I've seen as to the majority's mindset.

Jim as a seller and a broker I don't particularly care for the highest and best personally.. And what I do on my new builds when buyers come in they always ask.. I tell them yes 3 people looked at the house today and expressed interest ( other wise they would not be there in the first place) and I tell them we don't do the Multiple offer we are first come first serve.. but we don't cut price .. its 10k non refundable ( these are owner occ homes in the 550 to 700k price points). So what has happened is they will rush home and either call my wife to write the contract if they are not represented or their agent will write the contract.. WE sign the first one that comes in.. Time is of the Essence as we know and its true in our little 90 home development. so instead of 18 month absorption for the first 30 homes we sold them all in 6 months. Well now we have to build them LOL. hair on fire.. but hey good problem to have.. for every pre sale my bank releases a spec loan. so when I get this kind of presale activity I can get loans as quick as I can build them..
I did have 3 buyers on one lot.. and I always tell them when they ask I am not a used car salesmen so I am not going to tell you that you need to do something all I can tell you is its first come first serve and 3 people looked at it today.. so on that one lot Nice single level 2k sq ft home for 600k.. 8K sq ft lot.. one buyer called that night at 8pm and Had Lori write it up.. 2 other buyers not sensing the urgency showed up to our open on Sunday and first one when I told them we got a contract and its accepted she did not believe me all but called me a liar and stormed out. I told her we can act that fast when we are the brokers and the OWNERS when we get a contract we sign it on the spot if its full price and to our terms. The other was disappointed but we moved them over to another lot.. so got 2 out of 3 into contract in 24 hours.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Mark Abbate:
@Jay Hinrichs
Our agent recommended an escalation clause on a previous offer and in this market, and especially on that specific property I deemed it risky. I didn’t want to be responsible to outbid someone else when I might not have the capital to do so. So I’ve just been sticking within my limit and getting outbid until the right property presents itself.
U can do escalation and then with draw if you don't like where it went to.. nothing wrong with that then they will take the next in line.. keep that in mind.

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Mark Abbate
OP
Rental Property Investor · Whittier, CA · Member since 2019 · 22 posts · 19 votes
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@Jay Hinrichs
Ok that is definitely good to know. I did some research on it but since I haven’t used one before I’m not well versed. So thank you for that!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Mark Abbate:
@Jay Hinrichs
Ok that is definitely good to know. I did some research on it but since I haven’t used one before I’m not well versed. So thank you for that!
Unless something in the contract has a non refundable deposit just to bid.. which even in this market you dont really see

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Will Fraser
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y
Originally posted by @James Wise:
Originally posted by @Will Fraser:
Originally posted by @Braden C.:
@Mark Abbate You should start going directly to sellers and avoid MLS deals. You said it was an identical unit that sold for $490k so I am assuming this is a condo or townhouse? Why not spend a couple thousand dollars on a direct mail campaign and include an offer price in your letter? I am willing to bet you could not only find an off-market deal, but you could probably get one for less than the $490k once you point out that the seller won't have to pay commissions to agents.

Bahaha, Thanks, James! you get me :)

But where would one find a way to do such an awesome thing?!? 🧐

If only there was a way.......

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