What does Highest and Best Actually Mean?
In the current First Coast real estate market, we are hearing this phrase every day. Well, what exactly does it mean if you are one of the buyers in the deal? What exactly does it mean if you are selling your home and agent suggested you should go to a highest and best? I will do my best to explain both in simple terms. Because, I am simple guy and like things to be simple.
Scenario one. I am a buyer and my agent told me that the home that I want is going to highest best by Thursday at 5 P.M.
A scenario that is happening on about half of the well priced listings in the Jacksonville area right now. This means that you, as the buyer, need to submit your highest and best offer by Thursday at 5 P.M. That is the simple part. Obviously the higher the price you go the more likely you are to win the battle. There is more to winning than just price because a lot of the offers have the same price. So now it comes down to other factors like:
1. Financing. The type of financing can affect who the seller chooses to work with. Cash offers are king and will typically win every deal, because the buyer doesn't need appraisals to come in at value or financing to be approved. Conventional financing typically has less red tape than FHA or VA. Few people have enough money to buy a home cash so that isn't a huge factor in this market. Conventional loans are what the mortgage companies make their money on, but they are difficult to qualify for because they require a fairly substantial down payment. Because FHA and VA loans are backed by the government they do have more red tape and approval process can be longer and have more hanging in the balance with appraisals and repairs on the home. Also these options can get you into a home with as little as 3 percent down. In Summation, the best types of financing to win bidding wars in order. Cash, Conventional, VA and FHA pulling up the rear.
2. Timeliness of Offer. If you want to wait or sleep on it before you write the offer it could let the seller know that you aren't that in love with the home. Most sellers are emotional and want to sell the home to someone who is in love wit their home. In their mind (not that it really matters in the grand scheme of things) they want to sell their home to someone who will take care of it. Be decisive and be ready to put in an offer as soon as possible.
3. Finding and agent that can represent you the best. This goes without saying, but you want an agent who can represent your thoughts easily. If you want the house make sure they will express this to the other agent. The agent is an extension of you and your family. Most agents want to make their commission but make sure they don't want do the deal just for the commission, they need to be in your corner and have your interests at the top of their mind.
In our Jacksonville, Florida market the highest and best situation comes down to the financing aspect more times than not but the other aspects play a role as well. I hope this helped you understand your financing situation and can help you when offering on your next home.