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A bully is defined as “a person who uses strength or power to harm or intimidate those who are weaker.” Bullies aren’t just found in the schoolyard – they’re out there buying houses and making bully offers.
In the intense competition for “good houses” in Toronto, bidding wars are common. In a Seller’s market Sellers have control – many strategically set their asking price and conditions in the hopes of generating multiple offers (ie a “bidding war”) on a magical Offer Date set by them.
Related: All About Bidding Wars
Bully offers, also referred to as pre-emptive offers, occur when a Buyer tries to short-circuit the process set out by the Seller and re-take control.
So Mr. Seller, you want to review offers in 6 days? I’ll see you in an hour.
You want time to review my offer? You get 60 minutes.
You want how much for your house? I’ll offer you way more – you won’t say no to all those zeroes, will you?
The Bully Offerer is hoping that:
- a minimal number of people have seen the house, thus interest will be lower than it will be in 7 days
- those who have seen the house and are interested will not be able to pull together an offer fast enough to compete – and if they do, that they won’t have had time to get their financing and home inspection complete, thus making the Bully’s offer stronger
- The Seller gets so excited by a big number and is so intimidated by the process that they accept his offer
We represent a lot of Buyers, and an extremely strong bully offer can be a way of getting the house you’ve fallen in love with. It might mean paying more for a house – or it might mean getting a bargain. It all depends on the Seller and the skills of the REALTORS.
If you’ve falling in love with a house or condo and don’t want to get into a bidding war on the offer date, here’s how to make a bully offer work for you:
- Don’t show your cards in advance – Bully offers are most successful when they take the Seller (and their agent) by surprise. Ontario real estate rules do require the listing agent to inform potential Buyers that a pre-emptive offer has been received, as they might be waiting to submit an offer on ‘offer night’.
- Strike early – There’s no point in making a bully offer the night before ‘offer night’. You want to make that offer within a few days (or hours) of the property being listed for sale, before the Sellers start feeling too confident.
- Make the offer unconditional – meaning you’ve taken care of getting your financing in order and you’ve satisfied yourself with a home inspection before you actually make the offer. The goal is to give the Seller comfort that you can’t (and won’t) change your mind.
- Offer a price that will tempt to take your offer vs. waiting for offer night and a bidding war. Bully offers aren’t successful unless they really WOW the Seller. It’s not unusual in Toronto to see bully offers that are $100K+ more than the asking price (and often higher than what the comparable sales suggest is the market value of the home.) The key is convincing the Seller that they won’t get this price on offer night.
- Make the closing date amenable to the Seller – as well as any inclusions/exclusions. Basically: you want to seem like the easiest most agreeable Buyer ever. Now is not the time to ask them to throw in the big screen TV.
- Give the Seller a short time period to take it or leave it (that’s called the irrevocable period). If you make a bully offer and give the Seller hours or days to drum up competing offers, the strategy won’t work. Strong bully offers usually expire in a few hours to put pressure on the Seller.
- Don’t get cocky. If your offer isn’t great, you might just be encouraging other good offers to the compete with you and you’ll lose the house. If you can’t go big, it might be best to wait until ‘offer night’ and hope that the competition isn’t too big.
- Work with an agent who is experienced with bully offers. This is an advanced negotiating tactic and requires your agent to have a strong relationship with the agent who represents the Seller, and experience in knowing how to make it work for you.
- Accept that you might be overpaying for the house. In a bully offer, you’re essentially competing and bidding against yourself because you think the property will get multiple high offers on offer night. Recognize that it’s possible that nobody would have shown up on offer night and that you may have gotten the house for less money.
- Bully offers are about the certainty of getting the house – not about getting a good deal on it. Only make a bully offer when you’re really in ❤️.
- Convenience may also be a reason for Sellers to accept a bully offer too. For some Sellers, it’s not just about money. They may have kids or sick relatives living in the house and don’t want to deal with showings for a week, or they may just not want the worry and uncertainty of waiting until offer night.
We always counsel our Seller clients who are trying to get multiple offers (ie bidding wars) to resist the urge to look at offers until the magic Offer Date. We know that Bullies are trying to circumvent the process and are hoping to get the house for less money than they might in a bidding war. In almost all cases, if a Buyer is ready to make an offer today, they’ll be there next week on the magic Offer Date. What’s good for the Bully is rarely good for the Seller.
In some cases, it makes sense for Sellers to consider or accept a bully offer: lifestyle reasons, slower-than-expected showings, a neighbour listing their similar home for sale at the same time, etc.
If you decide to consider a bully offer, you’ll want to make sure it:
- Doesn’t have any conditions (financing/home inspection/status certificate)
- Is at a price that’s worth circumventing your pricing strategy
- Has a closing date that works for you
An experienced REALTOR can guide you through the process and ensure you don’t leave any money on the table.