If you’ve just started your home search, there’s a good chance you’ve been hearing some unfamiliar real estate terminology. One of the terms that sometimes causes confusion for buyers is “bully offer.” While it may not sound very nice, making this type of bid could help you get the home of your dreams in a competitive situation. On the flip side, bully offers don’t always make sense—and they’ve even generated some recent controversy in Ontario.
Wondering what a bully offer is, whether you should make one, and what all the fuss is about? Here’s everything home buyers need to know…
What is a bully offer?
A “bully offer” is simply a bid that’s made on a home before the date specified in the listing. If a seller states that they won’t be accepting any offers before July 9th and you make one on the 8th, that would fit the criteria. If you decide to go this route, your bid should be tempting enough to make the seller believe they’ll be missing out if they reject it.
Of course, we’ve found that many buyers are curious about the name. Why is it called a “bully offer?” The idea is that by submitting your bid before the date the seller has set, you’re pressuring (or “bullying”) them into selling you their home.
The truth is, the homeowner is always in the driver’s seat. Ultimately, they have the right to accept your bid, or to wait until their offer date to consider others that might come in. For this reason, some people don’t like the term “bully offer,” and they may say “pre-emptive offer” instead.
The pros and cons of making one
Wondering about the benefits of making a bully offer? It’s simple. If your bid is attractive enough, the seller might accept it. As a buyer, you’ll secure the home of your dreams—while avoiding the hassles and headaches that usually come along with a bidding war.
Needless to say, there are also some potential cons. The biggest is that you could wind up overpaying. The truth is, your ideal living space may not drum up much interest from other buyers. It happens sometimes. If you bid high only to learn that the property you’re purchasing hasn’t received any other offers, it may leave you wishing that you’d waited for offer night.
It’s also possible that the seller will stick to their guns, refusing to look at your offer before the date they’ve specified. But they’ll probably still consider it when that day arrives, which means you won’t be any worse off for trying.
When should you consider it?
A bully offer can help you achieve your home-buying goals, but only under the right circumstances. Because they usually involve significant amounts of money (enough to entice a seller who’s planning to wait), you should ensure that making this type of bid is worth it.
Let’s say you’ve fallen head-over-heels in love with a property. If you know you’ll be heartbroken if you don’t get to call it home, making a highly-attractive bully offer could be your smartest course of action. The same is true if you’ve lost out to other buyers in the past. If this sounds familiar, you probably know exactly what you want this time around. A bully offer may make a lot of sense if you’re truly determined.
Another time you might want to make a pre-emptive offer is when the listing price for a great property is really low. Your agent can help you determine the true worth of a home. If it’s undervalued, making a bully offer that’s significantly higher than what the seller is asking for could result in a solid return on your investment. But you should also be aware that some sellers price low in order to attract a lot of interest. When this is the case, they may want to wait and see how many appealing offers they can get.
The bottom line
While a bully offers can be helpful, you should know that not everyone is fond of them. Some buyers (and their agents) believe they provide an unfair advantage to the people who make them. More importantly, there are sellers who will reject them outright. That said, in some situations, the pros of making a preemptive bid far outweigh the cons.
Your agent can help you weigh all of the factors at play—and decide whether making a bully offer is right for you. If you do make one, they’ll ensure it’s as attractive as possible (which means finding the right dollar amount and cutting down on or removing the conditions you include).
Put simply, don’t fear the bully offer! It’s one of many potential buying strategies, and exploring it with an experienced professional can sometimes pay off big time.
Are you ready to find the home of your dreams? We have the local market knowledge and experience to help. Contact us to discuss your needs today.