"Highest and best," also known as a bidding war often strikes fear into the hearts of buyers who feel like they are unprepared for a battle royale. In reality, highest and best is a fair solution to the lopsided supply and demand realities of a competitive market. Rather than pitting buyers against each other by negotiating with multiple parties simultaneously leading to prices rising out of sheer frenzy, highest and best is a way for buyers to make an offer they feel comfortable making and leveling the playing field.
In any properly priced sale, it is common in a market like New York for the seller to receive multiple offers. However, trying to negotiate with buyers ultimately plays one offer against others and can falsely drive up the final sale price to something the final buyer feels is not fair. If buyer A offers asking, the only way to negotiate with buyer B is to say go above ask, now that's the new number, and Buyer C or Buyer A have to match or exceed that, it becomes an endless loop that leaves buyers frustrated and puts most seller's agents in a very awkward situation.
Highest and best eliminates this risk, so that when the final offer is accepted, all parties feel more satisfied with the outcome – the buyer who has come out on top still feels like they have gotten a good price for the home, the seller feels like they have gotten the best offer available to them, and buyers who did not come out on top feel more accepting of the situation, since a higher offer would not have been possible or comfortable for them. Like any blind bidding situation, research and knowledge of the market can help structure an offer, but at the end of the day, it's a personal decision for the buyer.
Overall, it is certainly not something to be nervous about. It is, however, incredibly beneficial during this kind of bidding process to work with an experienced and deal savvy agent who can help you frame your offer in a way that ensures it is the best possible given your goals, assets, and finances.