Thursday, March 14, 2013
Highest and Best - Does anyone win?
This month, I've noticed that the market in my area of St. Louis is really starting to pick up, especially on bank owned & HUD owned properties. More times than not, when I submit an offer for one of my investor buyers, I get a call from the listing agent letting me know they received multiple offers. They then asked for my buyers "highest and best".
When this happens, my buyers usually ask me if I think there are truly multiple offers or just a game the agent is playing. I sincerely believe that most listing agents are being honest, but it's hard for buyers not to be skeptical.
I advise my investors to submit what they are willing to pay, and not get emotionally attached. It's a numbers game for them anyway.
When my buyers get their offer accepted in the "highest and best" situation, they all want to know what the other bids were and I don't blame them.
When I started in real estate, I was investor and the "highest and best" situation is why I became interested in auctions. I much prefer to be in an open competitive situation where everyone can see the other bids.
I know my buyers would ALL prefer the auction format for these situations and I believe it would also help the banks get the best price.
Interestingly enough, we've recently been approached by listing agents looking for an online "offer" system. They are still unsure of the word "auction", but agree that having an open "offer" solution where all the buyers can see the highest offer would be ideal. It would also cut down on the juggling of paperwork in multiple offers situations.
Call it an "online offer" or "auction" doesn't matter to me, just glad to see traditional real estate moving in that direction.