In real estate, especially in a sellers real estate market you’ll hear the term bully offer. As of early 2024, we rarely hear of this term as we’re in a balanced market in Guelph real estate.

In recent years, due to the surge in the anti- bully movement in schools, it’s often been referred to as a “pre-emptive offer”.

What is a bully offer?

A bully offer is an offer made in advance of a scheduled offer date or offer night where a seller is holding offers or reviewing offers at a specific date and time. It’s an aggressive attempt by an interested buyer to bypass the offer date and secure the property by offering attractive terms to the seller.

Here’s the scenario:

As home buyers, you see a new home that you really love. It has all the colours, the layout is perfect.

It’s within your budget and your ideal location. But they’re holding offers and reviewing all offers on a certain date. Crap.

You and everyone else you know will be looking at this house for the next week.  Twenty people will put offers and it will likely sell way above your budget.

Unless you submit a bully offer…

Bully offers in real estate are designed to jump the queue in a seller’s market.

It gives the seller something in advance of that offer day that they find too good to be true- and they accept it.

Bully offers prevent you from competing with most people on offer day.

But there are some rules of engagement with bully offers

As Guelph real estate agents and buyer agents, one of the key things we advise our client in negotiation is to consider the other parties position (in this case, the seller).

They’ve worked hard to get their house ready to sell. It’s been stressful.

It’s been chaotic.

And they know it’s a sellers market, where people will likely be lined up to buy the house and create a bidding war, selling over the asking price.

But now they’ve done the work, the house is on the market and they know that whenever the offer day is, their home will likely be sold.

So, as the buyer, do you think a seller is going to accept a bully offer that has conditions of inspection and financing for 5 days? Of course not.

A bully offer in real estate shouldn’t have offer conditions (or contingencies for US readers)

A bully offer cannot contain conditions (known as a firm offer) if the buyer is serious about buying the house.

Think about this: A seller puts their house on the market on Thursday and reviewing offers on Tuesday.

On Friday, you (the buyers) put in a bully offer but don’t have your finances in order.

Therefore,  you ask for a 5 business day financing condition and home inspection in order to make an informed decision.

This doesn’t make any sense. If the seller was to accept your conditional offer, they would now miss out on any offers. On Tuesday, they may receive condition- free offers.

From the sellers perspective, this is not a good idea.  They could be missing out on a better offer from interested parties.

And besides, what happens if you, as the buyer, can’t get the right mortgage sorted out with your mortgage broker?

The way conditions are written, buyers can walk away for any reason related to financing without penalty.

This could even mean they walk away just because they couldn’t get the mortgage rate they wanted.

The house would go back on the market and the seller would lose all leverage in a hot market.

The home seller original plan of a holding offer strategy is completely ruined. They would have been better to just reject you and wait until offer day.

A bully offer in real estate has to be equal to, or better than the selling price that the seller would get on offer day

If a seller receives a bully offer in advance of their set offer day, they have to weigh the risk. Such as, do they accept your offer before the offer presentation date and move on?

Or do they think that perhaps there has been a lot of interest from potential buyers.

It may be in their best interest to wait it out until offer day. They may receive something better than the list price from all the interested buyers.

Many buyers think that bully offers may save them money. But that’s not what a bully offer is.

In fact, it’s the opposite- you’re likely not getting a lower price than asking.

You need to give the seller a premium to market value. Or, what they think they may get on offer day as an incentive to accept your offer.

Otherwise, what’s the point of even presenting a bully offer?

What you can do is give them little time to reply to your bully offer- sometimes 2 hours or less.

You don’t want to give the seller’s agent or sellers enough time to shop your offer around to other agents to get competing offers.

What’s the advantage of a seller to review a bully offer?

As mentioned above, it’s stressful and quite inconvenient to sell your home.

In fact, many consider selling and moving among the most stressful times in a persons life.

A seller has to prepare to put their house on the market for 7 days.

During that time, they deal with having to leave on a moments notice for a showing.

Additionally, keeping the house impeccable the entire time. Strangers walking through the house, traffic for your neighbours. It’s a lot to take on.

It’s possible that the seller is thinking “perhaps an amazing offer comes in early! I can just be done, sell my house and I can move on with life!”

Does a seller have to accept a bully offer?

No. Just because a buyer wants to submit a bully offer doesn’t mean a seller has to accept it. Especially in today’s market of regular listing cancellations, the seller always has the final call.

The buyers Realtor should do a bit of pre-work here to figure out the sellers position. This likely means getting in touch with the listing agent.

There’s no point in even discussing a pre-emptive offer if the seller has given clear instructions that they won’t review it.

In the Ontario Real Estate Association, , there is a form 244- Sellers Direction.

This form outlines just this- the sellers specific instructions and direction on offers.

Sometimes, the seller will outright say on this form: “pre-emptive offers will not be considered”.

This form is used in real estate transactions and signed by the sellers.

This ensures that everyone understands the situation and that no one has an unfair advantage over someone else.

How do submit a bully offer?

Talk to your Realtor. They should be able to guide you in the right direction so that you can submit an effective bully offer.

Remember: a seller doesn’t have to accept it. So, if you present it, you’ve just played your hand to them about how interested you are.The best way to lock up a house? Work with  Guelph Real estate agents who know the local market.

If you have further questions, feel free to contact Beth and Ryan Waller with Keller Williams Home Group Realty