A few weeks back I received some marketing material from another agent. It spoke of the price of a property coming to the market, then it offered three dates:
- The date the property was scheduled for MLS
- The date the property would be available for multiple offers
- The date the property would be available for pre-emptive offers
Over the past few years, a custom has developed of holding off offers for a few days after the showings begin.
Why? First, so the seller can feel confident that no money has been left on the table. Secondly, because real estate is not an exact science but rather a moving target in an active market.
Despite this, growing buyer frustration has brought on the pre-emptive offer – also known as a bully offer.
Who Makes a Bully Offer?
Someone who is willing to pay enough to make the seller not wait for the future offer date. This usually is a price that will make the overly stressed seller happy enough to forgo three or four more days of tension in keeping their house showing ready.
I have been on both sides: I have seen sellers not entertain bully offers and not have any offers on the day set for offers AND I have had pre-emptive offers rejected or not entertained by the seller to have the same buyer come forward on offer day with even more money.
There are no hard and fast rules, except at the end of the day all options should be explained and explored by the seller and their agent, always remembering that the listing agent’s fiduciary duty is to the seller.
Eager to break into the market? Explore these blog posts to expand your knowledge about the process of buying a home in Toronto.
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Keeping Things Under Control
The Real Estate Council of Ontario (RECO) asks that all interested parties be informed and that the listing information be changed to represent the change in looking at the pre-emptive offers. Try as we might with both pre-emptive and multiple offers, the parties that did not “win” the property are upset and frustrated.
Recently RECO has added a new form that makes the listing agent track all offers submitted on a property and has reiterated that all offers considered by the seller must be in writing. Further, verbal or informal offers should not be considered official tender.
An Agent’s Take – Helping Sellers
In a market where there is a shortage of product, I wish there were more other solutions to alleviate and elevate the process. However, as agents, we are always guided by the rule that our client has the final decision. We can only inform them of options to consider and and the end of the day, take direction from them.
Preparing to sell your home? Visit these blog posts to learn more about finding the right agent for you.
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What Should Buyers Know?
Today, many buyers in Toronto are entering the market with the expectation of competition. While bully offers can be advantageous in certain situations, they also come with their own set of pros and cons.
For instance, submitting a bully offer allows you to jump ahead of the competition and potentially secure the home you’re interested in. It can also potentially speed up the purchasing process by bypassing the usual offer presentation timeline.
However, submitting a bully offer is also a calculated risk – it can create a sense of urgency and limit the due diligence process. On top of that, there is no guarantee that other buyers won’t submit bully offers of their own, which can tell the buyer to expect even higher bids.
Ready to buy or sell in Toronto? As market-leading real estate experts, we can help you navigate the offers process. Send us an email or call 416-587-3300 to discover your path to success.
