"Give me your highest and best!" What is that, you ask? The answer is the most common phrase in today's REO market in the greater Destin area. Those of you who have been reading my previous market pulses know that REO stands for "real estate owned by the bank" and is the term for foreclosed property listed on the active market by the lender. REO's have been the hottest sector in the local real estate market and have been dictating overall market value. Most come on the market at very attractive prices and create instant sizzle. Agents scramble to notify their clients and then rush to submit an offer- usually within the initial 5 day active period. The bank will collect offers during the 5 days and then all who have submitted an offer will be asked for "their highest and best". In essence, what we then have is a silent auction. The bank will look at not only the offered sales price but will weigh any contingencies such as financing terms, length of contract to closing, requested seller's concessions and negotiable closing costs. I have been on the winning side of these auctions where my client came with a full price offer and I have been on the losing side when I have had clients offer ABOVE list price. Let's take a look at 2009 sales for combined residential (single family, condos and townhomes) in the greater Destin area. Total sales we find 769 closed transactions. Of those 769 how many were REOs or short sales and how long were they on the market: REO sales: 131 or 17% with an average 71 days on the market Short sales: 122 or 16% with an average of 239 days on the market What screams at me is the almost 8 months to close a short sale! They are purposely listed at below market prices to invite offers. And then the waiting game begins. Most buyers do not have the patience to wait for the bank to make a decision. And the answer might end up being a counteroffer instead of acceptance. The REOs while also listed at offer beckoning prices do close much sooner. But that only tells half the story. We need to compare the current active listings as of today (9/17/09): Total actives for combined residential (single family, condos and townhomes) - 2769 of which only 28 are REOs and 381 are shorties! Only 28 active REOs. Yet we have 381 active short sales. What will happen to those short sales that do not go under contract? You guessed it, they will be foreclosed upon and then become REOs. Typically, an REO will come on the market and if it is not sizzle priced the bank will reduce steadily every 30 days until they reach the sizzle point when multiple offers roll in. Then the call comes from the bank's listing agent, "We are in a multiple offer situation. Please give me your highest and best offer by 5:00". Let the silent auction begin! I could not post tables here but I have them on my site.