What is a Bully Offer & Should You Accept It?
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
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What is a bully offer?
A “bully offer” is an offer that is submitted to the seller before the designated and planned offer presentation day for a listing.
For example, if a property is listed on May 1st, and the MLS realtor remarks specify: “Offers, if any, will be reviewed on Monday May 7th at 630pm, to be submitted no later than 5pm” then a bully offer would be one that is submitted and expires before Monday.
Typically, a bully offer is:
- Significantly above the asking price, in hopes to convince the seller to accept because the buyer has already gone above ask.
- Made with a very quick expiry date to put pressure on the sellers to make a decision
- Submitted very soon after the home is listed for sale to avoid any other potential buyers coming in to see it and expressing interest.
The bully offer get its name because it is a buyer tactic to “bully” the seller in to accepting their offer before other buyers have the chance to see it and submit an offer.
Why would a buyer put in a bully offer?
A buyer makes a bully offer because they are sick of losing on offer presentation night and competing with multiple offer scenarios. Generally, they have been looking for a long time and lost many houses, and are not the best at competing when faced with multiple offers.
In a bully offer scenario, the buyer is trying to put pressure on the seller to accept their offer without considering others.
There is a level of uncertainty when it comes to bully offers. For the most part, if you aren’t competing with another offer you will likely get the property for less than it would sell for on offer night. However, there is the chance that if you were to wait for offer night that the number of offers received are less than you anticipated – in this case you may be paying more for the house than you actually have to by submitting a bully offer.
In a hot market, you being outbid on offer presentation night is more likely than a lack of other offers. Therefore, the point of a buyer putting in a bully offer is convincing the seller to accept and consider only your offer BEFORE other people view it. In our experience, the bully offer usually benefits the buyer more than the seller… and in most cases the seller would rather wait to see how offer night goes. If a buyer really likes the property, they will simply “try” the bully offer, and if they really love the house and the bully offer does not work out then they will continue to try and submit again on offer presentation day.
Why would a seller accept a bully offer?
I submitted a bully offer on a home in Langley about a month ago, and the listing agent called me saying that they already had 2 bully offer attempts and are very firm on waiting until the Monday offer presentation date. My bully offer was already $15,000 over the listing price, and subject free, and they still rejected it and waited until Monday.
My buyer liked the place so much that he chose to write again on Monday (as any serious buyer would have). The house ended up selling for way more than what we offered, even after we came up in price, and they had 7 offers on the property. Clearly the seller did just fine for themselves by holding off on offers until presentation night.
At this point, we’re back to the question: why would a seller accept a bully offer?
The reason why listing agents and sellers hold back offers is to create a frenzy on the property, and allow as many buyers as possible to see the property to ensure that there is maximum exposure and maximum offers. You can’t have a frenzy with only ONE offer, which is why most listing agents (myself included) will tell you that a sole bully offer received before the first open house has even happened is not going to result in the highest possible price for the property.
Furthermore, If a Buyer is serious enough to make a bully offer, they’ll likely be serious enough to show up on Offer Night. Therefore, most sellers will do better on offer presentation night versus accepting a bully offer.
However, not all properties are the same, and it’s not to say that you should NEVER consider a bully offer. So….
If a bully offer comes in…
We usually counsel our sellers to resist the urge to look at offers until offer night, especially if their property is hot and they’re already set up for a bidding war.
With that being said, if a bully offer comes in then you will need to consider a few things:
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The interest, feedback, and number of showings at the time you receive the bully offer.
We generally know what to expect based on the number of showings and feedback received from people that have viewed the property. If we see less interest and positive feedback than usual, then we may encourage you to look at a bully offer more than we normally would – especially if it’s a reasonable offer.
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The price!
Is the price more than you were expecting? Would it be considered a record sale? Is it simply at asking price? Bully offers come in all shapes and sizes, but we have seen sellers (not our clients) accept bully offers that are much less than what another buyer would have been willing to pay on offer night. Is the price worth not waiting to see what other offers come in at?
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Subjects!
Have they given themselves an out or are they subject free deposit in hand and ready to rumble?
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Uncertainty & 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. It can go both ways.
How to handle a bully offer…
While there are different ways to handle a bully offer, when you work with the Bridgewell team:
- We’ll get as much detail on the buyer and the offer as possible from the Buyer’s agent. We will need to know with full confidence that the bully offer is coming from a legitimate buyer that is serious about purchasing your property and not just someone that is just desperate and looking for asking price.
- It’s ultimately the Seller’s decision about whether or not to consider the bully offer.
- As soon as we receive a bully offer we will immediately contact everyone that has shown the property or has an appointment booked. We will also update the MLS remarks to see if there’s any further interest. We may be able to generate multiple offers despite it not being the originally scheduled offer presentation night, and will need to update interested parties that may have been waiting for Offer Night to let them know they have a chance to present an offer.
If you do want to consider a bully offer, we want to make sure that it’s a done deal and there’s no way for them to back out. In most cases we’ll be looking for:
- A firm subject free offer (meaning there isn’t a financing, strata document, or home inspection condition that the Buyer can use to back out of). If it’s not a done deal as soon as you accept it, then you might as well wait for offer presentation night.
- A confirmation of deposit cheque/funds that will be delivered to our brokerage upon acceptance, to show that they are motivated and ready to go.
If more than one offer comes in, then we will be dealing with things in the regular multiple offer fashion and we can choose to:
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Accept the best offer
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Negotiate via a counter-offer
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Reject the offers and decide to wait for offer night
If you’re thinking of selling your home and you’re looking for guidance about everything from staging to offers to your new home from the start, then give us a call at 604-765-0376. We’re happy to provide you the guidance you need to ensure that your home sells for the best price. Prefer text to set an appointment? 604-319-0200 or email [email protected] to start a conversation.
