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Welcome to Part 3 of our Seller Edition of What to Expect on Offer Night. [Related: What to Expect with Normal Offers with Negotiation and Bidding Wars.]
Despite your best-laid plans, it’s possible that a Buyer will try to circumvent your ‘offer night’ by making a preemptive offer (also known as a bully offer). Bully Buyers are trying to avoid a competition by making an aggressive over-asking offer before the bidding war date. Bully offers are usually:
- Submitted very soon after a home is listed for sale (sometimes within just a few hours), in the hopes that few people have seen it; the bully’s goal is to avoid competition from other Buyers
- Significantly above the asking the price
- Made with a very short irrevocable time (meaning that you may only have an hour or two to respond to the offer). The goal of forcing you into making a quick decision is both a pressure tactic and a strategy to avoid other buyers having enough time to put together a competing offer.
If a bully offer comes in…
While there are different ways to handle a bully offer, at the BREL team:
- We’ll get as much detail as possible from the Buyer’s agent, so that we know if this is a legit bully offer or just a desperate Buyer hoping to buy for the asking price.
- It’s the Seller’s decision about whether or not to consider the bully offer
- We’ll contact everyone who has shown the property or has an appointment booked to see if there’s any further interest – we may be able to generate multiple offers despite it not being ‘Offer Night’
If more than one offer comes in, then things will follow the usual bidding warpath (though usually on a much tighter timeframe). If no other offer comes in, Sellers can choose to:
- Accept the offer – Congrats, you’ve sold your home!
- Negotiate via a counter-offer
- Reject the offer and decide to wait for offer night
There are all kinds of strategies that your agent might employ during a bully offer, so listen, don’t get over-excited, and ask lots of questions.
Should you accept a bully offer?
We usually counsel our Sellers who have set themselves up for a bidding war to resist the urge to look at offers until Offer Night. If a Buyer is serious enough to make a bully offer, they’ll likely be serious enough to show up on Offer Night. But of course you need to consider a few things:
- The interest and number of showings at the time the bully offer comes in. We generally know how many showings to expect, so if we see less than usual, we may encourage you more to look at a bully offer than we normally would.
- The price! Of course, that’s the most critical piece of the game. We’ve seen Sellers (not our clients) accept bully offers that were much lower than they could have received on Offer Night – we know that because we had Buyers prepared to pay more (sometimes up to $100,000 more) but who were unable to sign an offer in time to compete).
- Risk: While there’s always the risk that accepting a bully offer means you might be accepting a lower offer than you could have gotten on Offer Night, there’s also the risk that the bully does not re-submit their offer on Offer Night and you’re left selling at a lower price (sometimes tens of thousands lower than the original bully offer).
- Any extenuating circumstances: bad neighbours, feuding exes, children and pets, sick family members, etc.
If you do accept a bully offer, in most cases we’ll be looking for:
- A firm offer (meaning there isn’t a financing or home inspection condition that the Buyer can use to back out of).
- A sizeable deposit cheque delivered to our brokerage before the offer is accepted
Bully offers are stressful and often result in regret (on both the Buyer and the Seller sides). My best advice:
- Discuss the possibility of a bully offer with your agent before your home goes on the market – the pros, cons and their opinions, given your particular property and situation
- If you decide you don’t want to be tempted by a bully offer, ask your agent to sign the document that instructs your agent not to show you any offers; that means you won’t even know if someone tries to make a bully offer, so you can avoid any temptation and regret.
- Don’t get greedy – but if you like the possibility of a bully offer, give some thought as to what your magic price would be to take a pre-emptive offer. It may be higher or lower than what you’d be hoping to get on Offer Night. A quick, firm sale that’s over without all of the showings and unknowns might be worth a lower price, or you might decide that giving up the possibility of getting more on Offer Night is worth an extra XX dollars.