Written By: Graeme MacPhail, REALTOR® of Royal LePage Nanaimo Realty. I’d love for the opportunity to earn your business in both buying or selling a property. Give me a call.
Bully Offers: What are they?
An offer that is often referred to as a ‘bully offer’ is one that has been submitted to the seller before the intended offer presentation time.
For Example: You’ve just listed your home on Thursday the 1st and within the remarks of the listing there are specific instructions that “Any offers be reviewed on Monday the 5th at 7:00PM” as you want to generate as much activity as possible, and host an open house on the weekend. However, Friday the 2nd later in the evening a buyer and their REALTOR submit an offer ahead of schedule with a short expiry on it.
This is what’s known as a bully offer and it gets its name because it’s a tactic used by a buyer to ‘bully’ the seller into accepting their offer before other potential buyers have had a chance to see the home and submit their own offer.
More often than not, what you will see in a bully offer is:
- Above asking price, in hopes to convince the seller to accept this offer rather than wait to see what others may pay.
- Minimal subjects or potentially no subjects so make the seller more confident in accepting this bully offer.
- Quick expiry time so there is not enough time for other potential buyers to react and submit their own offer.
Why would a buyer submit a bully offer?
When the market is hot, its not an uncommon story for a buyer to have lost out on more than one multiple offer scenario and that can get quite draining on a buyer, especially if they have been on the house hunt for an extended period.
In a bully offer scenario, the buyer is now trying to get the property early, and trying to avoid any potential completion that may come on ‘offer presentation day’.
As a buyer, submitting a bully offer comes with some calculated risk. You are submitting your offer in the hopes of enticing the seller enough to forego the weekends activity of showings. The risk here though is the potential that maybe no other competing buyer is there on offer presentation day and you would have maybe then have been negotiating down on the price instead of your bully offer that might be above the asking price.
Why a seller might accept a bully offer?
Just like from the buyers perspective, the seller also has some calculated risk in how they might deal with a bully offer.
The reason why a listing agent and seller may choose to make the decision to hold off on offers until a set date is in an attempt to create a busy buzz on a property and allow enough time to generate lots of activity and interest in the home with the hopes that more exposure may mean more offers.
The risk for the seller is the unknown of what may (or may not) come if they wait until offer presentation day. If you reject the bully offer and there is the possibility that come the set ‘offer day’ that they may not return, or may be the only ones at the table wanting to buy the home instead the hoped-for multiple offers. You’ll probably now find yourself now looking back and wishing you had accepted that bully offer.
An advantage for the seller though is that they and their listing REALTOR® know what kind of interest and activity their home has been generating. The knowledge about the showing activity will certainly help guide a decision to accept or reject a bully offer.
David and I have recently listed and sold a home that we received a bully offer on day one of the listing activity that was $30,000 above asking. This was promptly accepted because unknown by the buyer and buyers agent was that there was no more inquiries or showing request on the home for the upcoming weekend and it was felt by the seller and us that by the time we arrived at the offer reviewal date, it was likely there would only be this buyer wanting to write an offer.
So should I accept a bully offer?
There is no perfect answer to this. This is all going to depend on the strategy you have laid out with your REALTOR®, what type of activity your property is generating, and the quality of the offer.
If you’re thinking of selling your home and are looking for some guidance on strategies to help optimize your return and get you the best result possible give us a call. We would love to have the opportunity to earn your business.