How to Navigate a Bully Offer
In this highly vigorous sellers market, Buyers often wonder how they can get the upper hand on competition and seize the house they want. It’s apparent that finding a home and simply waiting to make an offer won’t cut it these days, but most often than not there is steep battle to outbid those vying for the same property you’ve got your eyes on. In some cases, Buyers find themselves more compelled to take more aggressive measures when making an offer and this is where the ‘bully offer’ comes into play.
So what is a bully offer? Sellers will often price competitively and ‘hold offers’ until a designated date in order to stir up Buyers interest, giving Buyers the time they need to view the home and make an offer. This strategy is meant to attract as many offers as they can get, in hopes of inducing a bidding war between those who are interested in the property. A bully offer or a ‘pre-emptive offer’ bypasses this path, and is when a Buyer makes a tempting offer on a property before the initial date the Seller has established they will be viewing offers.
It is essentially a leg up on the competition and often-necessary course of action if Buyers are determined to win the property they love! It’s important to note however that a Seller is not obligated to view a bully offer. They may choose to ignore or turn down the offer and continue with their intended strategy. It is completely up to the Seller whether they choose to entertain the bully offer or not. In any case, going in with the right Bully Offer is key! A strong bully offer is normally prequalified, with an offer above list price and excluding conditions.
When should you make a bully offer? The answer of when Buyers should consider making a bully offer is dependent on the particular agent and Buyer. Some individuals view bully offers as unfair or even an unethical upper hand, and may therefore opt to never use this method. If a seller expresses that they will not look at offers before a certain date, than there is an accepted understanding that the Buyer & their agent will honour and respect this date. That said, some Buyers and agents may instead make a bully offer before someone else has the opportunity to. Bully offers have a reputation of being and underhanded and unfair advantage, but in this increasingly cutthroat Sellers market, it pays to get with the times. The plain truth is, bully offers are more commonplace than you may think and being the one to make the offer first does give you a leg up before somebody else swoops in and makes the offer before you can. A bully offer is likely to happen regardless, whether you’re behind it or not. When it comes to real estate, it’s important to be proactive and some agents may advice their clients to make a bully offer as a necessary strategy to secure them the home. However, it is recommended the Buyer make the final decision at their discretion. In any case, it’s important for Buyers to remember to treat every real estate opportunity like it will sell tomorrow. Do note that other Buyers can still counteract your offer with their own bully offer, as the Seller’s agent is obligated to inform all interested buyers that an offer has been submitted. That said another strategy is to limit the consideration period of a bully offer so the Seller is compelled to make their decision fast, and before other Buyer’s have time to formulate an offer of their own and submit it.
It is a guarantee for Sellers: While the goal of most sellers is the ‘list low’ and hold off on offers in order to encourage a bidding war and ‘sell high’, this strategy is not always a guarantee. In some cases, holding on an offer might not spur as much buzz for the property as intended and a Seller has to be aware that coming out of offers night might not always result in the outcome they were hoping for. However, a bully offer is a guarantee. The Sellers know exactly what they will be getting and under what terms. If the Seller chooses to entertain your offer and if the offer is tempting enough, they may feel compelled to avoid the burden and risks of offers night and opt to accept a bully offer for the security.
You’ll learn more about what to Offer: Suppose you make a bully offer and it get declined. Don’t fret…now you have a better idea of the kind of offer the Seller is expecting when going into offers night. You may discover that the house and the Sellers expectations are not within your price range, and you can therefore continue your house hunt. Or you can go into offers night with a newfound knowledge and confidence. Now that you’re aware that the Seller won’t accept any less than what you presented in your bully offer, and you can take this information and use it to formulate a stronger and more aggressive offer that will stand out against competition.
A strong Seller’s market can be a difficult one for buyers to navigate and a bully offer is just one tactic that works to tip the scale in the Buyer’s favour. Remember that a bully offer is not about haggling the Seller down for the best deal on the home. Rather it’s an aggressive strategy to secure you the home you love and should only be used if you are determined to make that home yours. Be prepared to pad your offer greatly, and know that you will most certainly end up paying more than the home is worth. But in order to stand a chance against competition, your bully offer must be as tempting to Seller’s as you can make it, both in convenience and in return! Need more help formulating the right offer in a Seller’s market? I’m here to help!