What's a Bully Offer and Why Are They Becoming More Common in the London Market?

If you're actively looking for homes, or if you are thinking about selling your home and have been looking at other properties on Realtor.ca you may have seen listings that specify a time and date for an offer presentation.

For example: "Offers will be considered Tuesday October 25 at 7pm"

This is a strategy that becomes more common in a Seller's market, so we have seen it migrate down from the GTA to London a bit more in recent months.

Ultimately, it is simply a marketing strategy to allow time for potential buyers to view a property, exposure to the market, and perhaps even a public open house before "entertaining" offers.

This can be a good thing for sellers (in an ideal world for the seller, it would encourage competition, result in multiple offers and a higher sale price), but it can be risky as well.

Buyers are getting tired of competing, what they view as "games" and waiting a few days to offer on your property could be enough time for them to fall in love with another home.

So, now that I've given the basics on that pricing strategy- you can understand why the "bully" offer exists. Or the less negative sounding term- the preemptive offer.

If a buyer likes a property and doesn't want to wait until "offer day" there is nothing stopping them from putting an offer on paper, and in fact the Realtor(r) who is representing the seller has a professional duty to make their seller aware of the existence of said offer.

From there, it's up to the seller. Depending on their rationale for using the "delaying offer" strategy they may hold firm with that strategy and refuse to even look at the offer, or curiosity may get the better of them and they may want to look at what the offer is before ruling it out. Human nature being what it is, I think the odds are good that if a bully offer is submitted- the seller will at least ask for the details.

This is why most Realtors(r) who guide their buyers to submitting a bully offer would suggest they go in with a strong offer. This isn't really the time or place to lowball or include 18 pages of conditions. If you want to "bully" the seller into breaking their own "rules" and accept your offer- you better be able to make them think the bird they have in their hand is worth more than any they have in the bush.

The bully offer typically has a short irrevocable period- meaning the buyer is asking the seller to look at their offer and decide QUICKLY if they would like to proceed.

This part of the strategy is to discourage other offers from coming forward. You can bet that the Realtor(r) representing the Seller in this situation is calling anyone who showed interest in the property and letting them know about the existence of a preemptive offer. If other buyers aren't given enough time to view the property or put together an offer of their own- it would hypothetically limit the possibility of competition for the bully offer.

How the seller will respond to the short irrevocable again is a matter of their personality and what their Realtor(r) suggests. Some people really don't like bending the "rules" for the "bully", whereas some are thrilled to be done the process with a solid offer in hand days before they expected. Some sellers would even question: if someone was interested enough to put together a solid offer and try to beat everyone else to the table, would their interest would completely evaporate after 2(or however many) hours, or could they push back a bit?

The fun (and terrifying) part of real estate negotiations is you never know what the other party is thinking, there is always an element of risk in any strategy!

If you've been in a situation where you were interested in a home and it sold before the "offer" date, it can be frustrating to say the least. If you are waiting for the offer day, your Realtor(r) can use several professional strategies to stay informed about the existence of bully offers.

If I'm being perfectly honest I much prefer the organic approach to managing offers, and allowing interested buyers to come in as soon as they are ready, but every situation is unique. The important thing is that as Realtors(r) we are treating each other with respect, communicating clearly and doing our due diligence to protect our clients and preforming our professional obligations as mandated.

I think preemptive offers can be a valid strategy for a buyer in this market, as long as you understand the potential reaction of the seller. Personally I see it more of an "I love your home, I am anxious to get an offer done today, I would love to present something really strong so we can both walk away as winners, instead of the wait an see approach", rather than a hostile/bully situation, but I guess it depends on your point of view.

Have you been involved in this type of offer as a buyer or seller? What was the outcome and how did you feel about it?