“Highest and Best” Is a Terrible Term. Here Is What It Really Means.
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We all say highest and best. Highest is fine, because every buyer understands price. But best according to whom, measured how? It asks a buyer to optimise for something nobody has defined, so they guess, and they guess money.
Half of that phrase is useless
"Highest and best." We all say it. I have said it. It is one of the worst pieces of language in this business and we keep using it anyway.
Highest is fine. Every buyer understands highest. It means price, and price is a number you can put in a blank.
But best? Best according to whom, measured how? Best depends entirely on the seller's situation, and the buyer has no way of knowing the seller's situation. So the instruction asks a buyer to optimize for something nobody has defined for them.
What buyers do with an undefined instruction is exactly what you would expect. They guess. And what they guess is usually "more money," because that is the only variable they can see.
What happens when everybody guesses
I have watched this play out on a listing that drew 27 offers, which I wrote about in how I run a multiple offer process for sellers.
When that many people are guessing, you do not get twenty-seven good offers. You get a handful of strong ones and a long tail of contracts full of terms nobody asked for. Escalation clauses on sellers who did not want them. Thirty-day settlements for sellers who needed sixty. Repair requests left wide open on a house whose owners were terrified of exactly that.
And somewhere in that pile are two or three buyers who would have happily given the sellers precisely what they needed, and who never found out what that was. That is the real cost. It is not that the seller got fewer offers. It is that the seller never got the offer that was sitting right there, unwritten.
Why telling buyers is in the seller's own interest
The instinct is that saying less is safer. That giving buyers information hands them an advantage.
I think that is backwards, and here is the reasoning.
A buyer who knows you need to stay in the house until the end of June can offer you that. A buyer who does not know will either not offer it, or will offer a shorter date and force you into a counter, which costs you a round of negotiation and some goodwill. The information did not reduce your price. It routed the buyer's generosity toward the thing you actually wanted.
Sellers do not lose money by being specific. They lose money by receiving offers aimed at the wrong target.
There is a fairness dimension too, and it is not a small one. If I share guidance with one agent and not another, I have created a process my sellers could be criticized for. So whatever I tell one buyer's agent, I put in writing and give to all of them. Same information, same document, everybody. That protects my clients as much as it helps the buyers.
What useful guidance actually looks like
There is a real difference between being specific about needs and disclosing other people's offers, and it is worth being precise about where that line sits.
Useful, and fair to everyone:
- The sellers need to remain in the home until roughly the end of June.
- The sellers favor a fully underwritten preapproval and would like the ability to speak with your lender.
- The sellers would rather limit their repair exposure than negotiate repairs after the inspection.
- The sellers will not be considering escalation addenda on this property.
Not fair, and not something I will do:
- Telling you the top offer is at $612,000.
- Reading another buyer's terms to you.
- Confirming whether you are above or below a specific competitor's number.
The first list lets every buyer compete on the same footing. The second list sells out whichever buyer trusted me with their paperwork first, and any agent who does it to a competitor will do it to you.
If you are the buyer and nobody will tell you
Most of the time, nobody will. So you have to work it out, and the good news is that the situation usually tells you if you are paying attention.
Ask either-or questions instead of open ones, because a guarded agent will often still pick. Short settlement or long? Clean offer, or would they consider paying some of your costs? Read the listing for tells — a vacant house says something different than one with a child's bedroom photographed in it. An estate sale with several names on the deed points toward simplicity. A seller already under contract elsewhere points toward a date.
And then do the thing that works even when you know nothing: put everything you are genuinely willing to do on the table, and let the seller decide what counts. Do not make that judgment for them. The term you almost left out is sometimes the reason you got the house. That principle sits at the centre of how I win multiple offers for buyers.
The phrase I would rather use
If I could retire "highest and best," I would replace it with something closer to what is actually being asked: give us your strongest overall offer, and here is what strong means to these particular sellers.
That is longer. It is also honest, and it produces better paper.
Until that happens, when you hear "highest and best," treat it as an incomplete sentence and go find the missing half. If you are selling, supply it. If you are buying, ask for it, and if nobody gives it to you, deduce it. See what sellers really want for how I sort that out.
Where people get stuck
Sellers get stuck believing that silence is strength, then wondering why none of the offers fit.
Buyers get stuck treating "best" as a synonym for "more," which turns every competitive situation into a pure money contest — the one contest where the buyer with the deepest pockets wins and everybody else loses by default.
Neither of those is necessary. The whole framework is in the complete guide to real estate negotiation in Southern Maryland.
Frequently Asked Questions
Highest means the strongest price. Best means whatever matters most to that particular seller, which the buyer cannot know unless somebody tells them.
Because half of it is undefined. Buyers fill the gap by assuming more money, so sellers receive offers optimised for price rather than for what they actually need.
No. It routes a buyer's flexibility toward the terms the seller wants and produces stronger offers from the buyers most able to close.
It should go to everyone in writing. Sharing guidance selectively creates a process the seller can be criticised for.
No. Telling buyers what the seller needs is fair; revealing another buyer's price or terms betrays the buyer who submitted them.
Ask either-or questions, read the situation for clues, and then put everything you are genuinely willing to do on the table rather than pre-editing your own offer.
Selling? Say What You Actually Need.
I will help you define what “best” means for your situation and put it in front of every buyer, fairly and in writing.
Dawn Riley
Associate Broker, Realtor, Master Certified Negotiator
The Riley Team at Deep Roots Real Estate
410-414-2438
dawn@dawnriley.net
https://dawnriley.net/