If you haven’t read this article about bully offers, please have a look.
In a market like we’re experiencing right now, there are more way more buyers than sellers. Inventory is low, and demand is high.
That means it’s very normal to see multiple offers on most properties.
The standard operating policy for sellers who know their property is in high demand is to hold back on offers. This creates a “bidding war” situation where buyers are competing against each other on a set date and time.
This favours the seller, because they’ve concentrated all demand to happen on the same day and time. Buyers are forced to decide how much they want the property by doing things like: offering a very attractive price, eliminating their conditions, giving the seller the closing they want, and even having a deposit in hand.
Typically offers are held 4-7 days after launching on the Multiple Listing Service (MLS), including at least one weekend to get maximum exposure.
In an effort to reclaim some momentum, buyers might choose to make a pre-emptive offer (also known as a “bully offer”). If the buyer sends a really good offer early, it might cause the seller to reconsider their strategy of holding back, knowing that they have an attractive offer in hand today.
In this situation, the urgency shifts to the seller. There are deadlines called irrevocable periods with offers, and a good bully offer gives the seller enough time to accept an offer, but not too much time so that all the other buyers can jump into the competition.
Sellers are forced to ask themselves:
“Will the buyer be back on offer night?”
“Do we think we can do better later, or is this the best offer we’ll get?”
It can be a tough choice… is it better to stick to the plan, or to take the early offer?
After working with hundreds of offer holdbacks and pre-emptive offers, here are some questions sellers should be asking when a pre-emptive offer comes in before their offer date:
What are the numbers saying?There’s a science to selling your home. You can read the numbers like a dashboard. Are the online views slow or doing well? How many people have marked your listing as a favourite? How many views, likes and shares have you had on social media? How many inquiries (emails, calls) have happened directly from the public? Having real numbers and factual information is a good starting place to determine your next best steps, and this starts with having an agent who actually knows HOW to analyze these numbers.
How are showings going?Recently we had a situation where we launched a property with an offer holdback date, and showings were slower than expected. We knew that, but the buyers didn’t. When the buyers sent us a strong pre-emptive, it was a no-brainer to take it. We likely wouldn’t have been very successful on offer night. Depending on the amount of competition, there is a strong correlation between the number of showings and the number of offers you will likely receive. Usually, the closer you are to your offer date, the less likely you should be to work with a pre-emptive offer. Smart buyers know the best time to send a bully offer is QUICKLY, before any expectations are set, and before there’s a good “read” on the market.
How annoyed are we with selling? How stressed out are we?Some of our clients with really in-demand homes have had almost EVERY single appointment slot booked from 9:00 AM to 9:00 PM in a single day. If there are kids or pets involved, it can be difficult. If there’s no friend or family member that will accept you into their home, it can be VERY difficult. Meals on the run, and complaints from the entire family can wear anybody down quickly. Not to mention that most people start their sale very tired from all of the preparation work to get their home ready. Until you’ve experienced this yourself, you may not be able to see how compelling it is to stop the process a few days early.
What other options do buyers have right now?It’s a good idea to take a peek at the competition. Are there any other properties that could pull buyers away from yours? So much can change in one day, and having the most current information about the buyers’ other options will help you to decide if it’s better to take an early offer, or to wait it out.
Unfortunately there are no right or wrong answers here. Every situation is different, every market is different, and every seller is different.
Our job as your professional agent is to ask you the right questions, lay out all the facts, and have an honest discussion with you about your options.