What Does “Highest and Best” Mean in Real Estate?

Highest and Best Mean in Real Estate

Ever stumbled upon the phrase “highest and best” in real estate? Spoiler alert: this phrase doesn’t have anything to do with very tall buildings in good condition. Highest and best is actually a big deal in real estate negotiations. When trying to quickly sell a home, you want to get the best bang for your buck. Here is a full breakdown of what highest and best means in real estate.

The Definition of Highest and Best

In real estate, ‘highest and best’ is a term used during bidding wars. More commonly, this happens with properties listed on the market. When a seller receives multiple offers, the seller’s agent requests all parties to submit their highest and best offers. Talk about putting the pressure on!

Calling for highest and best forces buyers to show their cards and place their highest bid for a property. Bidding wars can issue, driving up the price even further when this strategy is used.

Seller’s Perspective of Highest and Best

For sellers, “highest and best” is like hitting the real estate jackpot. It’s your golden opportunity to have buyers compete. This can drive up the property’s value way beyond your initial asking price. Of course, sellers still have to look at the other terms of each offer, such as:

Sometimes, a lower offer with fewer complications can be more attractive than a higher one wrapped in red tape.

Buyer’s Perspective of Highest of Best

As a buyer, hearing “highest and best” can pump up your adrenaline. This call can lead to heating bidding wars and intense negotiation. You must decide what final card you’re going to play in hopes of winning the competition (AKA getting the house under contract). Submitting an offer requires balance.

Consider how much the property is actually worth versus how much your willing to pay. without overstretching your budget. What’s your long-term strategy with this piece of real estate? If you plan to resell in a shorter time period, make sure you buy it low enough that it makes financial sense. When you can’t bid a high amount in response to highest and best, try to make your terms more favorable toward the seller.

It’s Not Over ‘Til It’s Over

In the “highest and best” scenario, the seller reviews all offers and may accept one right off the bat. Other scenarios for this include a counteroffer to one, or even rejecting all and starting over. Similar to a poker game – you play your best hand, but the final outcome is unpredictable.

Creative buyers can look at properties and identify value-adds they can do to it after they buy it. For example, partitioning a larger piece of land in multiple properties can increase the overall value of your initial purchase. Look at a property from all angles to see if it makes more sense to increase your offer and aim to be the highest.

Does the Highest Offer Always Win?

When a seller calls for highest and best, it’s easy to get caught up in numbers. Thankfully, there’s another often overlooked aspect – the emotional factor. For sellers, this might be their family home filled with memories.

An offer that acknowledges this emotional value, perhaps through a personal letter or a gesture that shows appreciation of the property, can sometimes give you the edge during a bidding war. Make yourself stand out and seem human!

If there are preferences that you think the seller has, work with them, not against them. For example, if the seller is dealing with a squatter issue and would rather sell the property occupied by that person, see if you can work with that. They can sell the property as-is if you don’t request anything, making your offer strong. Of course, don’t get in over your head. Landlords should only take on squatter situations if they know how to handle them.

Tips When Highest and Best is Called

Navigating a “highest and best” situation can be tricky, especially for first-timers shopping for a new property. Here are a few tips:

Experience Massachusetts realtor and expert negotiator, Bill Gassett of Maximum Real Estate Exposure, stated, “The highest and best strategy isn’t a tool that should be used lightly. It can and does backfire sometimes. Make sure that you read the room of interested buyers before forcing them to make a move. In a sellers’ market, this can work well.”


Highest and best in real estate is a power move performed by the seller. It creates urgency amongst interested buyers, leading to bidding wars and higher sales prices. Of course, this strategy isn’t bulletproof. There are times when sellers fall flat on their faces when trying this. It can scare buyers away sometimes. Additionally, buyers can get offers accepted elsewhere and move on from yours, leaving you stranded. Either way, calling for highest and best is a good strategy for sellers – and for buyers, it means put on your negotiating pants.