What Is A Bully Offer In Real Estate?
Written by: Remington Joseph
While we are seeing our real estate market shift towards a much healthier state with more variety and freedom for both buyers and sellers, there’s still a good amount of competition out there right now. Regardless of what your goal is, it’s important to be aware of some of the different strategies so that you can always get the best deal possible. One of the common methods used that you should know about is the bully offer.
What is A Bully Offer?
As harsh as the name might sound, a bully offer isn’t nearly as aggressive as you might think. In a scenario where a seller is going to start accepting offers at a certain date, placing an offer to buy that property ahead of time is known as a bully offer. It may not be the outright threat we know bullying to be, but these preemptive offers can place a bit of extra pressure on the seller while getting ahead of the competition. If you’re extra eager to try and get a chance at your dream home, this might be the strategy that works for you.
While bully offers can prove to be an effective strategy, as with most things in real estate, knowing when to employ it is crucial. A bully offer is going to be most effective in a seller’s market, when the competition is the most fierce, so do keep that in mind when you’re thinking of making this type of offer.
What Happens When You Make A Bully Offer?
Making a bully offer might put you a step ahead of the competition, but it may not always go the way you expect. For starters, a seller may not even look at the bully offer you put forward. In Ontario, a realtor’s job is to convey every written offer to their client as soon as possible. If the seller decides that they only want to look at offers presented before the date they chose however, your preemptive offer may never make it to the table. Like with regular offers, the decision is completely in the hands of the seller.
If you want to increase the odds of your offer being considered, it can never hurt to do a bit of extra research beforehand. When sellers have a chosen date for offers, they usually have a target price in mind. If you can predict that number with your offer, you’ll increase the chances of your offer being looked at by a considerable amount. You’ll want to make sure your research is thorough here, so that you can avoid overpaying. Remember, more money isn’t always the right answer.
Another thing to keep in mind is that you aren’t the only buyer who can use this strategy. Just as you can make a preemptive offer, other eager buyers can do the same. Usually, a realtor will notify interested buyers when a bid is made ahead of time, so being first doesn’t guarantee you an exclusive claim on any property.
Should You Accept A Bully Offer?
As a seller, you have a lot to consider when it comes to potentially accepting a preemptive offer. Generally, it’s recommended that you wait until all of the offers are in, especially if you already have a selling strategy in place, but naturally, you need to consider your own situation before. What kind of deal is being offered, and how does it stack up against what you were hoping for? Knowing the value of your own property is going to play a big role in helping you with this decision, so much like with placing an offer, doing your research is going to help you in a major way.
As a seller, you always have the option to accept a bully offer if the price and conditions are favourable. It’s important to remember though, that this doesn’t always guarantee the highest possible price. With more time on the market, your home may be able to garner more interest and more bids in the coming days.
Bully offer buyers are usually extremely serious when it comes to making an offer, as they’ve likely gotten kicked around in the market prior. They’re a lot more eager to beat out the competition once and for all. A bird in the hand is sometimes better than two in the bush, and we’ve seen buyers not accept the bully offer in hopes of more on the bud date only to end up walking away with less.
Whether you’re in the position of the buyer or seller, we always recommend working with an experienced realtor to help determine the best strategy going forward. The bully offer is a viable strategy, but knowing when to consider using it could be the key to getting the best deal possible.