The data confirms that the housing market is running at a red-hot pace, with record low interest rates, low inventory with pent up demand pushing up sales activity and prices to new highs. After looking for a long time and losing out on several properties in bidding wars, many buyers are attempting to gain an advantage by submitting a” Bully Offers” ahead of a seller’s established offer date.
What is a bully offer?
A “bully offer” is a “pre-emptive” “take-it-or-leave-it offer” that is submitted to the seller to purchase a home listed for sale, before the designated and planned offer presentation day. It is a tactic a buyer uses to jump the queue and “bully” the seller in to accepting their offer before other buyers have the chance to see it and submit an offer.
The seller may have instructed their sales representative to delay or hold all offers until a specific date and time, when all competing offers can be considered at once. Doing this allows extra exposure for the home to create a competitive bidding war.
Typically, a bully offer is, significantly above the list price, in hopes to convince the seller to accept because the buyer has already gone above asking. Bully Offers usually has a very quick irrevocable date and time to put pressure on the sellers to make a decision. They are submitted very soon after the home is listed for sale to avoid any other potential buyers coming in to see it.
Are “Bully offers” prohibited?
Bully offers are permissible in real estate transactions. In fact, the seller’s sales representative must present the bully offer to their client unless the seller has directed their representative not to do so.
Tips for buyers and sellers?
The main tip for a purchaser considering making a “bully offer” is to be prepared. Work with your mortgage specialist to get pre-approved, if possible, get a pre-house inspection done on the property. Before placing an offer on a home, know how much the property is worth. In any bidding situation, work with your representatives to determine the best way forward regarding the value of your offer and the appropriate conditions to include.
Sellers do your research and have discussions with your listing agent to make sure you understand the pros and cons involved. As a seller, it’s critical that you know the market value of your home ahead of time. Be prepared for buyer’s pre-emptive offers. It might be the best offer the get, but it is possible you might get more offers if you wait until your presentation date. This dilemma is often the primary reason some sellers do not accept bully offers. Usually, the price is substantially higher than the asking price. Then again, seller could hold off for the offer date and possibly get a better offer. Unless the offers knock your socks off, I recommend that you wait for offer presentation date where it is almost guaranteed you will have multiple offers.
If you’re thinking of selling your home and you’re looking for guidance about everything from staging to offers to your new home from the start, then give me a call at 416-897-3503 or email firstname.lastname@example.org. I am happy to provide you the guidance you need to ensure that your home sells for the best price.