What is a bully offer?
A bully offer, also known as a preemptive offer, is an offer that is made by a buyer earlier than the date the sellers have stipulated that they will be reviewing offers.
In a seller’s market, which at time of publication we are currently experiencing in Greater Victoria, sellers will sometimes instruct their Realtor to “delay offers” or “hold offers”. This means that the seller will not look at offers from potential buyers until a given number of days after the home has been listed for sale. For instance, a property may be listed on MLS on a Thursday and the seller has decided that they don’t want to consider offers until the following Tuesday, five days after the property has been put on the market. On the listing, the sellers’ Realtor will put a special note visible only to real estate agents indicating that offers are to be sent to the home sellers’ Realtor by a certain time on Tuesday.
Home sellers “delay offers” in the hope that more potential buyers will have the time to view the property and that the sellers will receive more than one offer.
The potential downside to a seller of delaying offers is that if only one buyer makes an offer on the date set for offer presentation, the seller may well end up getting less than if the seller had not delayed offers.
A buyer makes a bully offer in the hope that the seller will find their offer so attractive that the seller won’t want to wait until Tuesday to see what other offers may be presented.
The vast majority of bully offers that are successful are unconditional offers and they are often over the asking price; sometimes substantially over the asking price.
If a seller receives a bully offer which does have conditions, such as a financing condition or an inspection condition, the seller will often not accept the bully offer and decide that it’s better just to wait until the time for offer presentation. But, this depends on a number of factors.
Some sellers will instruct their Realtors that they will not consider any bully offers, thinking that anyone who would make a bully offer will present an offer at the time set for offer presentation.
The potential downside to a buyer making a bully offer is that if the buyer had waited until the time for presentation of offers, it is possible that the buyer may be the only party making an offer and the buyer wouldn’t have to pay as much as they had to pay to get their bully offer accepted. But, at that time this article was written, Victoria BC has a severe shortage of homes for sale. As such, assuming the home is properly priced, most properties are attracting multiple offers.
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TOGETHER, Hal Decter, LL.B. and Audra Poole bring a unique level of knowledge, experience and service that is hard to find.
For eleven years, Hal Decter was a practicing real estate lawyer and partner with one of Canada’s top law firms. His client experience ranges from some of the country’s largest corporations to individuals and couples starting their first businesses or buying their first homes.
Audra Poole brings her research acumen and luxury marketing and sales talents to the team. She is a highly respected marketing and public relations executive with more than twenty years of local, regional and international experience.
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