In very hot “seller-friendly” markets, we see many properties holding off on offers until a future date, typically 4-7 days after launching on the Multiple Listing Service (MLS).
Holding offers gives the property more chance to be exposed to the market, with the hope that more than one buyer will show up on offer day to compete with other buyers.
This obviously puts a lot of power in the hands of the sellers. They WANT to have people fighting for the listing, because that could drive their final sale price up to record levels.
Of course, there’s also a higher risk to hold back, because what if nobody shows up on offer night? Speak with your real estate agent to see if this is the right pricing strategy for your type of home and your neighbourhood.
To increase your odds of success as a seller while holding back on offers, it helps if ALL of these factors are all present:
- Your home is in an active price range with lots of buyers looking.
- There’s not a lot of other homes for sale & competition is low.
- You either have a nicely presented home with no major objections, or there’s strong demand for your combination of features (like a fixer-upper on a big lot).
On the other hand, buyers really dislike these situations, because they feel like they’re at the mercy of the process. Often times, to remain competitive, there’s pressure to increase deposit amounts, remove conditions on home inspection and financing, and to pay more than any previous sales in the area.
So in an attempt to gain a bit more control, buyers can choose to send a pre-emptive (bully) offer to the sellers.
By doing this, the hope is that the buyer will dangle something attractive in front of the sellers, so that they choose NOT to wait a few extra days for offer night.
A great bully offer will catch the market off-guard.
Ideally, the bully offer will have a very short time limit for acceptance (more on irrevocable strategy here), with no conditions, a cheque in hand, and a price that’s high enough that the sellers would consider changing their game plan to accept immediately.
The short time frame is key, because ideally you don’t want to give other buyers and their agents enough time to prepare their own offer for a quick bout of competition.
The downside? If you send a bully offer that’s NOT accepted, you just showed the sellers what you would be prepared to pay, giving them valuable market feedback.
So in summary… a bully offer happens when a buyer disregards the sellers’ instructions to submit offers on a particular date and time. It can give a buyer an advantage if done well, but it can also put them at a disadvantage if the seller doesn’t take the offer.