What exactly is a Bully Offer?
When a Seller lists their home for sale on MLS and indicates that they are "holding offers" until a certain date and time, and they will not entertain an offer in advance, but an offer is submitted prior to this, it is called a "Bully Offer", or also known as a pre-emptive offer.
In a hot Seller's market where there are more Buyers than than there are homes for sale, many Sellers make the decision to hold offers in an attempt to get a bidding war and potentially drive the selling price up. This tactic can be very successful for a Seller when market conditions are right and the home is listed competitively. This is what we are currently experiencing in the Grey Bruce Market & surrounding areas.
I have personally been involved in 4 competing offers in the past week. Some offers were successful, others were not. The more offers submitted, the higher the sale price seemed to be, and of course, in each instance the winning bid submitted without any conditions, means a FIRM deal upon acceptance.
So you are the Buyer, and let's say you have lost out on a couple of bidding wars thus far. You must be frustrated and feeling beat up. What can you do? Firstly, get organized and try to set yourself up to enter your next offer without conditions. Another approach that can be, but is not always successful, is to submit a Bully Offer.
The Bully Offer is just that, it is a high pressure sales tactic on the part of the Buyer designed to convince the Seller to look at their offer quickly, in advance of the scheduled Offer Presentation, with little time to react or to notify other interested Buyers.
Here is an example:
Let's say a Seller listed their house for sale on Monday. They wish to allow showings for one week, and have requested to view all offers on the following Monday evening with an Offer Presentation at 4:00 p.m. after the home has had a chance to be marketed and to ensure that everyone who is interested has a chance to compete.
However, after one day on the market, the Seller's agent calls the Seller and informs them that they have received a Bully Offer, and that it is only good for a few hours. The Seller must quickly decide if they wish to deal with the bully offer or continue as planned, and just wait and see what happens the following Monday evening.
Seller's are under no obligation to entertain a Bully Offer, it is up to them to decide. The Seller can choose to wait. But once a Bully Offer is submitted, the Selling agent is required to present it to the Seller, and the Seller can choose to accept it and start negotiating.
Good ethical and professional practice on the Selling agent is to notify all of those who have shown the property, or have scheduled to show the property, that a Bully Offer (pre-emptive offer), has been submitted. This at least gives others a chance to submit at the earlier time as well. It is how your Selling agent does their best to work in the Seller's best interest to get them the highest and most appealing offer that they can.
As a Seller Should You Accept a Bully Offer?
There is no right answer.
In many cases a Bully Offer tends to be very attractive to a Seller. The Buyer's agent knows that in order for the Seller to even consider a Bully Offer it must be worthwhile, and this usually means over asking price and with little of no conditions. But, accepting a Bully Offer may leave a Seller wondering if they could have got more if that had waited.
On the flip side, if a Bully Offer is received and the Seller chooses not to deal with it, it could offend the Buyer and if on Offer Presentation there are no other offers, the Seller may so choose to offer less, or worse have changed their mind, and or even bought something else instead.
I hope that you found this Blog Post informative.
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