You hear it a lot in this industry: Give me your highest and best! But when putting together an offer, too often everyone focuses on the “highest” part when they should really focus on the “best.”
Wait, the “best” and “highest” offer aren’t the same thing? Sometimes they are, but not always.
Especially in this competitive marketplace, buying agents have to get creative to help their clients’ offers stand out. And frequently, that standout feature isn’t the highest price, but something else that offers value to the seller — enough value that a lower monetary bid turns out to be the best bid on the table.
Can’t think of an example? Here’s what I mean:
Situation #1: The Seller Wants Flexibility Around the Settlement Date
Let’s say a couple puts their home up for sale in Conshohocken, Pa. Rapidly, they collect bids ranging from $300,000 to $307,000.
Right from the get-go, the sellers will be eyeing up that highest bid at $307,000. But what if the $300,000 bidder throws in something more important?
You see, the sellers are struggling to find the right new home for their family. Sure, they’re courting several palatable offers, but they don’t want to accept any of them before they’ve found a suitable place to move. They’re looking to buy their forever home — and the last thing they want to do is rush it!
But if they don’t find something soon, they’ll have to rent while house hunting, or move back in with their parents — neither of which is appealing.
Now imagine the lowest bidder offers to extend the settlement date for up to six months. Don’t you think these sellers might just consider it, even if it means a lesser bid?
The buyers here may be offering less money, but they’re offering greater value. That extra time to find the right home and avoid a tumultuous transition may be worth thousands of dollars to these particular sellers.
And that’s how that the buyer offering the lowest bid — but the best value — could score the home.
Situation #2: The Seller Wants Flexibility Around the Home Inspection
Let’s take some other sellers in Conshohocken. They, too, are courting offers ranging from $300,000 to $307,000.
The agent representing the $300,000 bidder knows his buyer will need some creativity to score the home. How can his buyer stand out with the lowest bid?
Now imagine the agent knows the sellers are dreading the home inspection. Given significant problems with the house, the sellers anticipate the results of the inspection affecting their bottom line.
The $300,000 bidders don’t want to waive the inspection completely — that’s a little too risky for most buyers — but they can offer to relieve some of the uncertainty around it.
After discussing it with his buyer, the agent tells the sellers that no matter the results of the home inspection, if the buyer decides to take the home, she’ll take it for $300,000.
In other words, the inspection’s outcome won’t affect the $300,000 bid.
The other buyers aren’t making this same offer, so their bids could drop after the inspection. How much would the seller pay to have a certain offer?
They might just pay the $7,000 difference between the lowest and highest bid.
Once again, the offer with the lowest bid — but the highest value — could score the home.
The Highest Bid and the Best Offer Aren’t the Same Thing
Value comes in forms other than money. Sometimes it’s greater flexibility, freedom from uncertainty or something else that’s valuable to the buyer.
Do you have a story of a low bid scoring the home? We’d love to hear it! Leave us a comment.
NEVER MISS AN UPDATE! Join our mailing list to receive these articles directly in your inbox.
Matt Mittman and Eric Rehling are the owners of RE/MAX Ready in Conshohocken, PA. See articles from them about the importance of inefficient communication, the Eagles, thriving during your busy season, magic wands, perfecting your customers’ experience, good training, measuring profitability, routines, taking the right kinds of risks, real experience of being a real estate agent, communication styles, building an audience, and more.