highest and best offer?? How much would you offer?

Question

I just heard back from an offer I submitted. Asking price was $65,000. I offered $65,000.The listing agent came back with this statement:

What should I do? I ran the numbers at $65,000 and at $75,000 as you will notice I am being conservative with my expense numbers. Please below:

Any and all advice is very much appreciated.

Best regards,

Tim

Vonetta Booker · Answer

That's the thing, though--you're not forced to offer anything.  If you've done your numbers and they allow for x amount, then that's your offer, period. Better to stay within the numbers that make sense rather than get emotional & buy way too high just because you wanted to win, lol. Because that's when you lose!

I think "highest/best" is often a bunch of crap to hype buyers up into a bidding war--I say, let the others overpay.

Ned Carey · Answer

@Tim DiCicco I cant read your numbers but even if I could I tell you what is right for you.

I make offers based on what is good for me, not based on what I think will get the deal. My goal is not to get the deal. My goal is to get good deals. I don't care about any given property.

John Thedford · Answer

Are you bidding against someone else or yourself? You already made an offer.

Sarah Ziehr · Answer

In my experience with highest and best- it depends on where the property is located and what are the comps.

If the property is priced right, and there are lots of other buyers in the market, then know that 5-15 other buyers are going to offer the asking price or $500-$1000 over the asking price. In order to win in a situation like this you need to offer $2k-$5k or more over the asking price.

I just saw a property yesterday that closed for $200k over the asking price! I understand why sellers do this, they want to sell quick and get a lot of attention in the first week that the property hits the market. They also only want to show the property 1 or 2 times and be done with it.

Scott Weaner · Answer

I hate that "highest and best" crap. How can anyone know if their offer isn't already the highest offer? Your offer could already be $10,000 over the next highest, yet you are forced to offer $10,000 more!

This also seems to suddenly happen on a property that has been on the market for months, the suddenly, miraculously, there are 5 offers.

Mike S. · Answer

I don't know your area, but that ARV is terrible.  Also, are you sure you are not using magic numbers for the rent?  Around here, I would be looking at $75,000-$80,000 getting to an ARV of $120,000-$130,000.  Rent would be $1000-$1200.  Like I said, though, I don't know your area.

Greg B. · Answer

Don't get into a bidding war. Resubmit at $65,000

Bidding wars play to the emotional side of real estate, the homeowner side. Be an investor, you're goal was $65k so keep it at $65k

Mike Wood · Answer

@Tim DiCiccoLooks like you have different ARV's for the different purchase price, which does not make sense.  Either way, it looks like increasing the bid will potentially put you in a negative equity standpoint.

I would firm up your ARV and put in a max offer that ensure you are not in a negative equity standpoint.  No body likes that, especially not the banks and lenders.

Regardless of the ARV, I would agree with @Sarah Ziehr, that something in the $2-5k range over asking is justified.  I would likely go on the high side of that range if I really liked the deal.

Tim DiCicco · Answer

Wow, that backfired! I tried to copy and paste

highest and best offer?? How much would you offer?

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