Give Me Your Highest and Best… Better Yet Just Show Your Hand

If you’re in the market for a home in Phoenix you’ve undoubtedly noticed that buying a bank owned home is an excellent  opportunity and investment.  Once you find  a home worth putting an offer on, don’t be surprised to get the “Highest and Best” response. These homes are in high demand and sell quickly so it makes sense there could be more than one buyer interested in the property… right???

Negotiations from a Bank’s Perspective

Lets sit on the other side of the table for a moment. You’re a bank and you have hundreds, even thousands of homes on the market to sell. You need to keep your costs down, streamline every transaction/sale while selling the home for the most money. As a bank you have two options.

Option #1: Negotiate in Good Faith

You’ll spend a week negotiating back and forth with the buyer and each deal will be uniquely complicated by the buyer’s list of emotional needs and wants.

Option #2: Bluff (Multiple Counter Offer)

This option surfaced with experience… You tell the buyer you have multiple offers and you need their highest and best offer. Instantly the buyer concedes to the highest amount they are willing to pay and they keep the contract simple because they want it to be accepted. You’ve got to admit this option definitely makes sense, at least from the bank’s perspective.

Today’s Market

Here is what we’re seeing, banks and investors are starting to respond too frequently with a request for the buyer’s “highest and best offer”. We’re seeing this response on homes that have been on the market for way too long and are significantly over priced… homes in situations where the likelihood of multiple offers is slim to none.

As the buyer’s broker I want to call BS and demand to see the other offer. However, as a home buyer you want the home and you don’t want to do anything to jeopardize losing the opportunity to purchase the home. At the end of the day, I can ask for the details of the other offer but the likelihood of getting any details from the listing agent is slim to none… gee, wonder why?

Responding to a Multiple Counter Offer

First, step back and take a deep breath. Don’t make any decisions until you’ve had some time to set the emotions aside and think it through logically. All too often buyers will dramatically increase their offer to secure their position as the best offer, so they “win” the home… but what if there isn’t another buyer?

80% of the time my buyers stick to their original offer terms and they end up with an accepted offer.

That being said, if your original offer was an unrealistic low ball with countless clauses that complicate the contract, I’d suggest reviewing the contract with your agent. Remember, simple is good when it comes to buying bank owned homes, just don’t fall prey to their sneaky tactics.

Author of this Post

If you have questions or comments just leave them below or get in touch.

Marcus Fleming

marcus.fleming@redfin.com
Serving East Valley, Cave Creek and Scottsdale
Homes Closed: 50+
  • Artur

    “…these guys broke all the rules and for years didn’t show an ounce of respect for the home buyers interested in purchasing their property.”

    The only way that happened is that we the buyers and agents let them. No one had to play along with their methods, but if you wanted the property you had to.

    Now that there is more competition from traditional sellers and short sales that compete in price with the bank owned homes, buyers have a little more leverage and should, as Marcus mentions above, “…step back and take a deep breath. Don’t make any decisions until you’ve had some time to set the emotions aside and think it through logically.”

    • http://www.redfin.com Marcus Fleming

      Well said, thank you Artur!

  • Chris Phelps

    There is a home in chandler az on 2346 south Navajo way chandler az, this home was taken out from under a woman who was disabled her husband Remax and her lawyer and her soon to be ex lawyer stold this home from this woman her name was even on the deed, The buy did not know but she has 3 special needs young adults thate are vertually now homeless, The lawyers and the client canived and decietly took this home from this woman who after 29 years of marrige the huband decided to abandon his wife and children,, the mother can not get ssi, nor disability, the husband was orderd to pay support temp. after the house was sold he never paid her on time nor the correct ammount till the divorce 20 months later, the company that bought the house is John Hall ,
    He and remax have been notified of this and refuse to couperate, the realaty company rep. Sherry falsly told the owner she could get the husband through court system to fix the house he let go for nearly 18 years, and she never followed through she , new the lawyer for the women and she new the lawyer for her spouse,
    ReMax knows this house was falsely taken from this woman who put 29 years of her life into raising there special needs boys, all delayed by 5to 8 years, the oldest having Autisum.
    Shame on you Re Max shame on these two lawyers and the represenative for the Re Max and Shame on you John C Hall for purchasing this property and not listening to the family.
    I guess the new way of lawyers making money is to take advantage of the inocent and now they all of money to pucrchase there little trinkets and vacations for there family, this sneaky lawyers and the realator can take advantage of the poor and innocent even in America, The woman who was taken advantage of her brother Cheif Howard C. Marshall of the Coast Gaurd was tragically killed three years ago giving his 1st year of retirment to the USA he was so giving he developed the saftey protocal for the waters of the USA and our Alies.
    Please dont purchase a home from ReMax nor John C Hall till they make things correct and fair with this woman.
    Thank you.