Highest and Best
In a competitive real estate market, encountering “highest and best” offer situations is increasingly common. This article clarifies the seller’s rights and responsibilities when navigating multiple offers, including when and how a “highest and best” request might come into play.
The Seller’s Prerogative: Reviewing and Responding to Offers
When a seller receives offers on their property, they retain significant flexibility in how they choose to respond. Regardless of whether it’s explicitly mentioned in the listing, the seller always has the inherent right to call for “highest and best” offers.
Upon reviewing offers, a seller has several options:
- Accept an offer.
- Reject an offer.
- Counter an offer.
- Do nothing at all.
- Call for “highest and best” by a specific date and time.
It’s crucial to distinguish between a seller calling for “highest and best” on an ongoing basis and a situation where offers are being held until a specific date. If a seller explicitly states they are holding offers until a certain date and time, this is treated identically to a delayed presentation of offers. In such cases, the seller should not review offers until the disclosed date, and the Delayed Offers Addendum must be utilized.
Is an Addendum Required When Calling for Highest and Best?
No, not always.
If offers are being presented to the seller as they are received (i.e., not a delayed presentation situation), the seller maintains the right to accept, counter, reject, do nothing, or call for “highest and best” at any point.
When a seller decides to call for “highest and best” in this scenario, that information can be effectively conveyed to cooperating brokers and prospective buyers via the MLS (Multiple Listing Service) and platforms like ShowingTime. An official addendum is not typically required in this instance. However, it is paramount that both the seller and their listing agent/broker strictly honor the “highest and best” submission date conveyed to all cooperating brokers.
Are All Buyers Entitled to a “Highest and Best” Opportunity?
No, not necessarily.
While it may seem unfair, a seller is generally not required to treat every potential buyer equally or even fairly, provided there is no discrimination based on a protected class (e.g., race, religion, gender).
This means a seller has the discretion to:
- Offer one specific buyer the opportunity to submit another bid.
- Decline to offer other buyers a similar opportunity.
The key exception to this rule is if a specific date and time for “highest and best” offers is posted on the MLS. In such a situation, this requirement applies to all buyers whose offers are being considered, and the stated deadline must be honored for everyone.
To help set clear expectations with your clients regarding multiple offer situations and the seller’s rights, please refer to this document drafted by Legal Counsel.