Should You Accept a Bully Offer?
BUYING A HOME, BIDDING WARS, BULLY OFFERS, SELLERS MARKET, SELLING A HOUSE, TORONTO REAL ESTATE MARKET, VAUGHAN REAL ESTATE, Vaughan realtor
A bully offer (also known as a pre-emptive offer) is an offer on a property that is holding back accepting offers until a specific date in the future but a prospective buyer decides to submit an offer earlier than the date that the seller has indicated that they will look at any offers.
In a hot seller’s market where there are more buyers than homes for sale, a common listing strategy is for sellers to list their homes and hold off accepting offers to a specific date in the future.
Why Would Buyer Submit a Bully Offer?
A buyer decides to submit a bully offer when “no way on earth are they waiting to submit an offer in the future to have to compete with a bunch of other buyers”. This offer strategy tends to be a high-pressure tactic on the part of the buyer and their agent.
Why Would a Seller Set an Offer Date?
In a hot real estate market where demand for property is high and supply is low or when a seller knows they own a high-demand property, they will list their property with a set offer date. The logic is that this strategy will permit the most number of buyers to view the property and interested buyers can then submit an offer at a future date. If the property was listed without a future offer date the property would most likely sell without many buyers having the opportunity to view the property. This strategy quite often results in a higher selling price.
Is a Bully Offer Strategy Effective?
It depends on a number of factors such as the seller, the strength of the bully offer, and the timing.
A seller is under no obligation to entertain a bully offer. The only obligation in this process is that the Realtor is obligated to present the offer to the seller. Whether the seller chooses to work with the bully offer or reject it is entirely their decision.
Should the Seller Accept a Bully Offer?
There isn’t a black or white answer to this question; quite often bully offers are quite good. Buyers and their Realtors know that in order to get the seller to accept their bully offer they are going to have to make it a really strong offer to get the seller to accept it. So quite often it means that these offers are above the asking price and with little or no conditions.
Other than price there are other things to keep in mind such as: does closing date work and what is included and excluded in the sale. The buyer wants to make there their offer is very appealing to the seller so meeting all their needs is critical to increasing the odds of getting the offer accepted.
The seller can only make a decision to accept if they have a strong grasp on the market value of their home ahead of time so that they know when a bully offer is worth accepting.
When is it a Good Idea to Deal with a Bully Offer?
It is a good idea to deal with a bully offer when the market is starting to change and the offer price is high. Plus, when the offer includes very few or no conditions – an offer sells firm is the ideal scenario.
Keep in mind that in this situation the listing Realtor must notify every other buyer Realtor who has clients that have indicated an interest in the property (either they have already viewed or are scheduled to view the property).
Sellers may also have personal issues that they are dealing with and may want to accept a strong offer so that their lives can get back to a normal routine as having buyers continuously come through the home can be quite challenging.
When is it NOT a Good Idea to Deal with a Bully Offer?
When the offer is not a high offer, has conditions and your home has tons of interest, and many buyers coming to view your home and there is great feedback being received on the home. In addition, if listing Realtor does not have enough time to notify are potential buyers that an offer has been received.
I hope you found this enlightening. It is important that sellers have a good grasp on the implications of listing a property and holding off offers until a future date, all the scenarios they may be faced with, and the criticalness of having a good handle on the value of your home as you prepare to list. Without this information, it will be very difficult to make an educated informed decision.
If you are thinking of selling your home reach out and let’s begin the journey of educating you on the best strategy to get your home sold quickly and for top dollar.