Inventory is low, demand is high, and Thank Goodness we have the ability to request to all bidders highest and best. If you were selling a property rather than buying you would be smiling. There are some ways to help yourself....keep cash on hand to pay your own closing and pre paids, ask for the quickest possible closing, ask your lender for more than one loan option for instance you may find a home that is in need of a repair that FHA won't accept but you could possibly move into a 203k loan and refi later for a lower rate. Hopefully you will have an experienced agent who has been at this for a few years. Agents that have been around for 7 or more years have already been through bidding wars, low inventory, and high demand, as well as prices that are creeping up. We have a few tricks up our sleeves (ethical ones of course) that can help you get your offer accepted. Good luck. Check out my website and let me know if I can be of help.
You have several options. You could improve your offer (that doesn't always mean money.. perhaps you'll offer a better closing date... one that's more inline with what the seller is looking for)... You could leave your offer alone, perhaps, as you suggest, your offer is already the winner (and hopefully remains the winner after everyone else has an opportunity to modify their offers), or you could decide that you don't want to participate in an "auction" style purchase, and withdraw your offer (that's one of the dangers of asking for highest and best).
First this is a legal practice. On a multiple offer scenario the seller can request the buyerâ€™s highest and best offer on the property to all parties concerned. Itâ€™s a supply and demand marketing situation where we have more buyers than product on the market today. Weâ€™re finding that our listings are almost always getting multiple offers today. Last week we had a particularly nice property on the market and it received seven offers in the first five days it was on the market. It was a traditional listing and the seller asked that we request the buyerâ€™s highest and best offer.
One practice that you may want to entertain is if youâ€™re bidding above the asking price for the property and your agent has advised that your offer might be above appraisal value that you have your agent put in the contract that the house must appraise for the value of your offer, and if it does not, the seller will sell the house at appraised value to the buyer. This practice puts you at risk of getting thrown out of the race for the property but it could make for a quicker close in the end that the seller may find appealing.
In these situation itâ€™s always best for the buyer to make the contract as clean as possible. It makes for a more attractive offer to the seller and of course all things being equal, a cash buyer would probably prevail over a buyer coming in with a loan. Today, the seller is in the driverâ€™s seat.
This should not be a reflection on your agent, I am sure he/she would like to see you get the home, but they can only do so much.
The experience you are going through is not uncommon here in the Valley. Inventory is shrinking and there are multitudes of buyers probably looking at a purchase of the same home.
I would encourage you to think like a seller. If you have high demand and multiple offers, wouldn't you shop those offers to possibly get a higher sales price? I bet you would say yes. That is what the Realtor may be doing.
If this is a Short Sale purchase, the listing realtor may know that the offers are too low for the asset manager to accept and needs a higher offer in order to satisfy the bank and make the sale.
From my experience, if this is a bank owned home for sale you are bidding on, they will almost always ask for a "highest and Best" offer when there is more than one.
Realtors are recognizing this strategy and adapting that same process because in most cases someone will always make a higher offer then what was originally presented.
The issue that restricts most Buyers is Financing. If you only qualify for a ceiling amount, then offering a higher amount may not be possible. If you are stuck in that boat then I might suggest that you offer to pay things like HOA Transfer Fees, Ask for less closing cost contributions, remove personal property from the offer like washers and dryers and refrigerators and so on. Remember though that if you have limited funds this might also be a problem because you're not just giving something up, your potentially coming out of pocket with a contribution at closing.
As far as multiple offers and highest and best, even if this doesn't work out, keep presenting offers. These kind of responses are common place most of the time now.
That Scottsdale Area zip code you are looking in is providing some nice properties that were once very high priced. You will have competing offers if you found a jewel property because right now people are looking for that great bargain and also a Scottsdale location to retire to. There are cash offers from retiree's who are pulling that stock market money to purchase a home allowing them to finally afford to live in North Scottsdale and have no house payment.
Best of Luck To You!
Stew Keene - eXp Realty - Professional Realtor
(480) 220-7491 email@example.com
The fact that the inventory for homes is so low that if you do not get this home then chances are you will experience this on another bank owned home.
This is legal and a common practice with bank owned listings. The request for Highest & Best is allowing all other buyers to put their best foot forward for a second chance at getting the home.
I worked with one of the top REO agents in Scottsdale and know a few tricks that will allow you to better your offer without being the highest price.
Good luck and I hope you get the home.
Keller Williams Integrity First
I have had this situation occur more this year than in 2005.
There is a housing shortage in Arizona!
Here is what I tell my buyers.
"At what price would you not care that the house sold, because you would not have paid that much for it anyway"?
Basically, what is the MAXIMUM amount you're willing to pay.
Make that your offer, and if you don't get the home, FORGET ABOUT IT and move on to the next one.
Hope this helps.
P.S. The housing shortage will get worse, not better, due to record low interest rates, 50% off sale, and companies moving to Arizona.
The banks do it all the time.
Experienced agents do it all the time.
Experienced buyers agents advise their buyers when this is most likely to occur.
BUT, no one is FORCING anyone to increase their purchase offer. It is always the BUYERS choice.
If you know your offer is under value (don't confuse this with above list price) you should be prepared to compete. If you are buying at the top of your budget, you may need to rethink your strategy.
Until there is a signed contract (signed by all parties) offers can be accepted. Even after there is a fully executed contract, backup offers can be accepted. If there are multiple offers, some sellers will counter offer all offers asking for 'highest and best'.