…How to deal with “best and highest offer” sales…

A very special brief for us recently involved the shortlisting, selection and acquisition of a home for two young interstate-based professionals who are moving down to Melbourne in the new year.

We enjoyed profiling suitable areas and arrived at Altona based on proximity to employers, value for money at a mid-fives budget,easy rentability for future investment purposes, and strong capital growth prospects.

When this townhouse came up for private sale, we pounced with enthusiasm.

The inspection impressed. This four year old townhouse had already done the significant depreciating and the age, condition and tenant-appeal was optimum. Our client’s criteria was met completely; from access to beach, 500m walk to train station, boutique block, internal layout, and even courtyard space for their cats. The dormer style upstairs bedrooms were quite enchanting and the light-filled downstairs living area meant that entertaining would be a delight for them.

The only catch was the format of the sale. The dreaded “best and highest” system would prevail.

This process is difficult for buyers because it isn’t transparent. It involves the submission of one offer and buyers don’t get a second chance, a right of refusal or an opportunity to refine their former offer. For many, the task of establishing a single and absolute figure can be quite daunting, particularly when there is little guidance available.

No buyer want to miss out a property, but they don’t want to spend tens of thousands of dollars more than the under-bidder either.

In this particular instance, the agent was most helpful and shed some light on the Vendor’s preferred terms, other local sales which compared, and he gave us a very clear time frame around the offer close-out process.

Our offer was not the highest of the three offers, however it was the only offer which enabled the vendor to settle within a tight time frame. Being a tenanted property with a lease in place until Christmas time, the other two offers were subject to vacant possession which meant that they were greater than 100 days each.

As the agent had hinted, the vendor valued a 45 day settlement.

Our clients secured a great property with the second highest offer; and were successful only because we’d listened to the agent’s tip and were prepared to be short term landlords during the wait.

Today two buyers are commiserating, but our clients are celebrating a well executed purchase.

Wishing our lovely buyers and their two cats a fantastic transition into Melbourne life, and years and years of great capital growth.

Photos sourced from Google and REA