High Offer, Countered With “Highest and Best”
Rental Property Investor · Whittier, CA · Member since 2019 · 22 posts · 19 votes
High Offer, Countered With “Highest and Best”
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Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5yHey @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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- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes5y
Originally posted by @Robert Campbell:
@James Wise I get it that you’re fighting for your life and you’re livelihood. I really do. And you’re right, I don’t understand the nuance of agency because it serves no purpose. The internet has an amazing way of rendering the unneeded truly unneeded. That’s where I see agency going. Millenials are going to see right through it, and I suspect we already are. Car Dealerships are no different, if there weren’t so many shady laws regarding how manufacturers can sell their cars, car dealerships wouldn’t exist.
As far as I’m concerned, as an actual investor and one who actively participates with real skin in the real estate game instead of only taking advantage of it, you might as well be selling Mary Kay.
Lol the fact that more people use Agents in a post Zillow world than before went right over your head...
If you're going to continue a discussion you would be better served to bring some actual data so you sound somewhat credible.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes5y
Originally posted by @Robert Campbell:
@James Wise It feels like those 88% are playing the game so they don't get blackballed. So, an honest question, are you showing a FSBO if there's no commission in it for you because of your fiduciary duty to your client? Probably not. Why would you?
Real Estate agency is a broken system, and I'm sure that behind the scenes brokers are paying legislators to keep it broken. It's a simple monopoly on the marketplace. I don't blame them one bit. My hope is that the FSBO.com and Redfins and Zillow's of the world are able to break it down as people are seeing how dumb agency is. Peer pressuring your friends into letting you siphon money off of their biggest investment is not a profession.
They say a man who represents himself in court has a fool for a client. Real estate transactions, being an arm of the law, aren't much different. I see what you're saying and understand why people feel the way you do. However in the real world agents do play an important role in representing principles in transactions, mostly preventing them from making expensive mistakes or ending up in lawsuits. There's a reason FSBO/ off market deals end up in litigation more often than transactions done through agents.
I actually felt the way you did at the beginning of my career but as I learned and did more deals, eventually becoming licensed and watching one example after another of buyers and sellers without agents screwing themselves over (often without even realizing it, most commonly by overpaying or overlooking property defects, but also in myriad other ways), I’ve come to see the value that quality agents bring to the table.
On a basic level buyers and sellers interests are diametrically opposed, so while it seems like it would be easier/less expensive to make a deal without a middleman, when the rubber meets the road transactions actually go smoother and have a better chance of reaching the finish line when agents are involved to grease the skids.
Don’t get me wrong, deals definitely get done without agents all the time. But there’s a higher probability of one party being screwed over by the other, or both parties ending up in court, when agents aren’t involved. Seems like you've had a bad experience working with agents in the past. Perhaps you just need to work with better agents who earn their commission and bring more value to the process. I guess I was lucky, I always had great agents to work with and learn from before becoming licensed. I did one deal without one and screwed up a bunch of things including overpaying for the property because I didn’t know any better, which is probably the most common mistake people make.
It’s easy to believe you’re getting a good deal by going directly to the seller, and sometimes that is the case. But more often than not the seller thinks their property is worth more than it really is and the buyer unknowingly over pays (not you of course, you're obviously a savvy investor, but most people don't know how to pull accurate comps or have access to the MLS to do so), or the seller hides defects/fails to disclose and they end up in court after closing, or the deal falls apart somewhere along the way and never makes it to closing because buyer and seller failed to come to terms or argue over something trivial, etc. As James mentioned 88% of transactions involve agents so there's obviously strong demand for our services. You'd think if an app or a website was going to take away all of our jobs, that would have happened already seeing as Zillow, FSBO and Redfin have all been around 15 years. In fact there are now more agents than ever before.
I know robots are coming for everyone's jobs across most industries, but I actually think real estate will be one of the more resilient in terms of the human element being necessary because it's at the end of the day it's always been a people/relationship business. So far technology has only made our jobs easier.
- Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes5y
It might be "scary" for you to think about, but not everybody is like you. Some people actually need help finding a home or going through the transaction process. Especially if its the 1st time and almost doubly more so when its the 2nd or 3rd for their whole life.... Its not a one size fits all proposition.
Besides, even Zillow's own financial reports shows they are losing tremendous amounts of money with their iBuyer program and the sales prices are significantly below general market value. But, the iBuyer program has its pros, but so far you definitely pay for them.
Good luck in your endeavors.
- Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes5y
@Joe Splitrock I love the "lower the offer" if you think you are the highest.
- Investor · IN (indiana) · Member since 2020 · 109 posts · 53 votes5y
@Mark Abbate receiving a highest and best means that they have multiple offers. At least if the agent is honest. As a Realtor myself I would guess that the listing agent is giving everyone else a chance to beat your offer or maybe just trying to put the squeeze on you. Either way the agent or the seller is trying to squeeze out every last dollar possible. Is the property the only one available in that area? I think they are hoping and maybe telling the other buyers about your 10K appraisal contingency in hopes of pressuring them to go higher with no contingency. Unfortunately this is the kind of market we are in. I would stand firm as you have. And some agents hate it and say its stupid (because it works) but I would suggest if you really love a property write a personal letter to the seller. It works way more often than not. I see sellers accepting the more personal offer over the higher dollar every week. After all it is an emotional process for most people not just business.
- 5yAmanda JacobellisBusiness MemberReal Estate Agent · Southern California · Member since 2020 · 95 posts · 43 votes
@Mark Abbate where are you located? It is definitely a sellers market right now but there are all kinds of strategies we use to get the deals. Find a kick butt agent! To someone else’s point I am always working off market deals for my clients. Do not over pay if it doesn’t make sense to your investment plan. There is a strategy of writing best offer plus $2500 not to exceed x amongst others
Jacobellis Group531 Reviews - 5yAmanda JacobellisBusiness MemberReal Estate Agent · Southern California · Member since 2020 · 95 posts · 43 votes
@Mark Abbate no number will be given if there are multiple offers. It makes no sense to go back and forth with multiple
Offers at the same time.
Jacobellis Group531 Reviews - Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes5y
I know it’s cliche but offer where your numbers are telling you and if someone bids $1 more than you and gets the property are you ok with that? If not, you should increase your offer. Best of luck!
- Rental Property Investor · Greenville, SC · Member since 2019 · 30 posts · 13 votes5y
@Steve K. Great post, Steve. Maybe you’re the agent I need. If someone actually came to me and showed me something that cashflows or found something that was off market or came to me with a clever fix on a property, then by all means, I’m in! It just doesn’t seem to be the case. In my experience, I find the place on my own, then have to call an agent, and it just all seems ludicrous. Having said that, that seems to have dried up. In our market, it feels like every property is priced about 10% over what cashflows at zero. So it’s frustrating, and I watch do-nothing agents take the 5% that would actually make the deal work.
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