What Are Real Estate Bully Offers? Should A Buyer Accept A Bully Offer?
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by Richard Morrison
- January 22, 2020
- Selling
- 0
Key Takeaway:
A bully offer is an aggressive, above-asking price offer submitted by buyers before the seller’s scheduled offer date in hopes of pressuring the seller to accept and avoid competition. Bully offers can benefit buyers by avoiding bidding wars but are risky for sellers, who may miss out on potentially higher offers. Sellers should seek guidance from an experienced real estate agent when weighing the pros and cons of accepting a bully offer.
The real estate market can feel like a battlefield these days, with buyers and sellers strategizing to get the upper hand. One tactic that has gained popularity is the so-called “bully offer” – but what exactly is it, and is it the right move for you? As your trusted real estate advisor, let me walk you through everything you need to know about bully offers from both the buyer’s and seller’s perspective.
Keep Reading:
- How Do You Buy a Home in a Seller’s Market in Canada?
- What You Need To Know Before Making An Offer On A …
- Reasons Your House Isn’t Selling Even In A Hot Market
- Tips to Selling Your Home
How Bully Offers Work?
A bully offer, also known as a preemptive offer, is an offer made on a property before the seller’s scheduled offer presentation date. This is the date set by the seller when they plan to review all offers received.
- Bully offers are submitted shortly after a home is listed, sometimes within hours of hitting the market.
- They are above asking price, often significantly so.
- There is typically a short expiration on the offer, sometimes just a few hours, to pressure the seller to accept quickly.
- The goal is to entice the seller to accept before other buyers have a chance to submit competing offers on the presentation date.
Essentially, the buyer is trying to “bully” their way to a successful purchase by aggressively preempting the purchaser’s process.
Why A Buyer Makes A Bully Offer?
In today’s competitive market, buyers are desperate to avoid bidding wars. They’ve likely lost out on multiple homes already after fierce bidding on presentation night.
A bully offer allows a buyer to:
- Preempt the competition by putting in an early offer
- Avoid competing offers by pressuring the seller to accept quickly
- Increase their chances of success in a multiple offer situation
A buyer may choose to make a bully offer for several reasons when looking to buy a home. In a hot seller’s market, where there is high demand and limited inventory, submitting a bully offer can give the buyer an advantage over competing buyers. By making a strong and attractive offer that is higher than the asking price, the buyer increases their chances of having their offer accepted by the seller.
Additionally, a buyer may make a bully offer if they have fallen in love with a particular property and want to ensure that they secure it before other potential buyers have a chance. This can also be helpful if the buyer is in a time-sensitive situation and needs to buy a home quickly.
However, accepting a bully offer means that the buyer must be confident in the condition of the property, as it may not allow for a home inspection before committing to the purchase. Ultimately, whether or not to consider a bully offer is a decision that should be carefully weighed based on the buyer’s individual needs and circumstances.
Pros and Cons for Buyers
Pros
- May avoid competing bids from other buyers
- Increased chance of successfully purchasing the home
Cons
- Risk overpaying without knowing what others may have offered
- Seller may still wait for presentation night
- Aggressive strategy may turn off sellers
Buyers should weigh these factors carefully before pursuing a bully offer.
Why Do Sellers Accept A Bully Offer?
Many sellers now specify a future offer date when listing their home. This allows:
- Time for more buyers to view the property
- The chance to compare all offers side-by-side on presentation night
- Often maximizes the final sale price
So why would a seller accept an earlier bully offer?
- Lucrative price – Bully offers are typically over asking, so may be very enticing
- Avoid hassle – Accepting early means no more showings or open houses
- Certainty – There is risk in waiting for more offers; bully offer guarantees a baseline
These benefits may persuade some sellers to accept a bully offer, but most still prefer to wait for presentation night.
Pros and Cons Of Such Offers for Sellers
Pros
- Potentially higher price from eager buyer
- Quick closure if ready to move on
- Avoid the hassle of further showings and offers
Cons
- May miss out on even higher bids on presentation night
- Added stress due to tight expiration dates on offer
- Goes against intent of specified presentation date
Again, careful consideration of these factors is needed.
How Much Should a Bully Offer Be?
There are no hard rules, but bully offers are generally at least $50,000 above asking price according to industry experts. In hot markets or for premium properties, they may be $100,000 or more above asking.
The goal is to wow the seller with an incredible price that is extremely difficult to turn down. Anything less is unlikely to be successful.
Handling Bully Offers as a Seller
Receiving a bully offer can be a mixed blessing for sellers. Here are some tips on handling them wisely:
- Consult your agent – Gain insights on offer strength, market conditions, and presentation night odds
- Notify all buyers – Ensure those with upcoming showings know of the early offer
- Consider the risks – Will you potentially miss out on more money by accepting early?
- Negotiate – Counter offer to improve terms if needed
- Set a minimum – Decide on a “magic number” bully offer price that you would accept
An experienced agent is invaluable in navigating these tricky situations. Don’t hesitate to lean on their expertise.
Are Such Offers Ethical?
Bully offers, also known as pre-emptive offers, are a controversial topic in the world of real estate. On offer day, potential buyers submit their offers to the seller, who then has the opportunity to review and accept the offer they find most favorable. However, a bully offer can also be made before offer night, which is when potential buyers submit their offers simultaneously. The term “bully offer” refers to an offer that’s higher than the purchaser’s offer.
While some argue that a bully offer isn’t ethical, others believe that it’s a legitimate strategy to secure a deal. Ultimately, whether or not to accept the bully offer is up to the seller. It’s important for sellers to carefully consider the terms and conditions of the bully offer before making a decision. Both buyers and sellers should be prepared to deal with a bully offer, as it can greatly influence the outcome of a real estate transaction.
Personal Anecdote
I’ll never forget the time a bully offer surprised my clients John and Sarah. Within 5 hours of listing their gorgeous suburban home, a bully offer for $75,000 over asking came in demanding a response in 2 hours! My clients were thrilled but conflicted. Was this a golden bird in hand, or should they risk waiting for presentation night?
We quickly notified all agents with upcoming showings of the early offer. Feedback had been stellar, so there was a strong chance more great offers were coming. After much debate, John and Sarah decided to wait it out. On presentation night, their home sold for $112,000 over asking price with 7 offers! While the bully offer was strong, their patience paid off in the end.
Did You Know?
According to a 2018 survey by Richard Morrison, over 60% of sellers who accept a bully offer later regret not waiting for presentation night when more offers came in. My own experience mirrors this – patience usually pays off if the market is hot!
Q: How do you deal with a Bully Offer?
A: When dealing with a bully offer in real estate, sellers have several options. They can choose to accept the offer outright, make an alternate counteroffer, make a pre-emptive offer (which can prevent other buyers from submitting their own offers) or simply wait until the set offer date before deciding how to proceed.
Q: Is there any obligation for sellers when they receive a Bully Offer?
A: Sellers are under no obligation to entertain a bully offer or even respond. If they decide not to accept it, then they will need to wait until the set date for offers has passed in order for other potential buyers’ bids to be considered.
Q: What happens if a buyer submits a bully offer and you don’t accept?
A: If you decide not to accept a bully offer, then you should wait until after the set date for offers has passed and see what other bids come in before making your final decision. This way you can compare all of your options and ensure that you get the best deal possible.
Q: Is there any benefit in Considering a Bully Offers?
A: There may be some benefits in entertaining bully offers but generally these types of offers are seen as lose-lose situations – either one party gets less than they would have wanted or both parties end up leaving money on the table. A professional real estate agent can help negotiate these tricky scenarios and maximize everyone’s return.
Q: What if I want to Accept my first Bully Offer?
A: If you want to accept your first bully offer then it is important that you make sure that it meets all of your criteria and that you feel comfortable with it. You should also discuss this decision with your real estate agent before committing so that they can provide advice based on their experience.
Q: How do Sellers view Bully Offers?
A: Many sellers view bully offers as being unfair because they feel like they are being pressured into accepting an unfavorable deal. However, if done correctly, there may be advantages such as faster closing times and better terms for both parties involved.
Q: Can I make a Pre-emptive Offer instead of accepting a Bully Offer ?
A: Yes, making a pre-emptive offer can be beneficial since it allows you more control over when and how much you are willing to pay. It also gives you time ahead of any potential bullies, allowing them time only after yours has been accepted .
Conclusion
When it comes to selling your home, bully offers can come in. A bully offer is when a buyer submits an offer without giving the seller a chance to present the offer to other buyers. The value of the bully offer might be more than what you expected, but it is also risky because you don’t know if there will be another offer coming in that is even better. Known as pre-emptive offers, bully offers put pressure on the seller and can be seen as a lose-lose situation from both buyers and sellers. If you choose to accept a bully offer, make sure that all parties are happy with that decision.
On the other hand, if you choose to decline and wait until the offer presentation night, then you run the risk that the bully buyer will withdraw their offer. Bully offers have become increasingly common so it’s important to keep this in mind when deciding whether to accept or reject one. In general, it’s best to get advice from an experienced real estate agent who can help guide you through the process when it comes to bully offers.
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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