What is a Bully Offer?

The best way to explain this is through an example ...

Let's say you, as a buyer see a home today and its reviewing offers five days from now (the Offer review date).  The Seller is clearly trying to create a bidding war.  In the fine print, it says the Seller can accept pre-emptive Offers before the Offer review date.  A bully offer (formerly known as a pre-emptive Offer) is an Offer received before the Offer review date.

Further, a bully offer usually has to be a substantial amount over the asking price and usually has no conditions and to be a "true" bully offer, there is a short deadline for the Seller to respond.  For example, a bully offer is 20% above the asking price, no conditions and the Seller only has 4 hours to respond. If the Seller does not respond by the deadline, a true bully offer says they are not coming back on the Offer review date. (Note: the Buyer giving a short deadline is not always done)

Are bully offers good?  I personally don't think they are.

Some buyers like bully offers because they get to avoid a multiple offer situation, which can be very stressful.  But my question is how do you know you are not excessively overpaying for the home?  The Buyer might assume there will be a lot of interest on the Offer review date, but what if there isn't?  By waiting till the Offer review date, the Buyer can adjust their price based on the the number of competing Offers.

Some Sellers like accepting bully offers because they think they are getting a better price than they would if they waited.   But like above, how does the Seller know they could not have gotten more if they waited till the Offer review date. Further, the only reason the Seller thinks they could have gotten more is due to the market analysis provided by their agent (or their own anecdotal evidence),  but what if their agent was wrong?

Also, some sellers might accept a bully offer because it allows them to stop "staging" / getting the home ready each day, which is stressful if you have a family with children (making their beds each, keeping home clean etc).

So what should you do?   There is no definite / set answer since it depends on the situation / facts of each buyer or seller.

Contact me and I can explain further ...

For buyers,  I do have a 3-point strategy to protect my buyers (who don't want to initiate a bully offer) but are interested in a home that accepts bully offers.

Albert Yu
Office: 416-494-9858


Popular posts from this blog

What are we doing different during COVID-19? How are we selling homes safely?

Welcome to my blog and find out why I created the blog.

Myth #1 - I am always overpaying when I participate in a bidding war