Many home hunters in Toronto feel nervous about entering the market, and it’s easy to see why. The competition for great properties is fierce, and there’s no shortage of stories about bidding wars that have spun out of control. That’s why we believe it’s so important for buyers to know about every tool that can help them during the process. Enter the bully offer.
What is a bully offer, anyway?
If you’re not sure what a bully offer in real estate, you’re not alone. Fortunately, the concept is very straightforward. Often, sellers won’t start considering bids until a specific day. When a home hunter submits one before the date specified, it’s considered a pre-emptive (or “bully”) offer. The buyer’s hope is that they can secure their dream home and bypass the competition by swaying the seller to accept their bid early.
Some home hunters see bully offers as unfair. In truth, a buyer who makes one is simply providing the seller—who is under no obligation to accept it—with one more option. Of course, if you decide to make a bully offer as part of your home-buying strategy, you need to ensure that it’s attractive. Here are a few tips for doing just that.
1) Make the cleanest offer possible
A persuasive bully offer should be clean—which means it won’t contain conditions. Here’s how it works. In many cases, buyers will include conditions in their purchase agreement. These are stipulations that have to be met in order for a deal to be considered final. For example, if you include a financing condition, you won’t have to go through with your purchase if your mortgage falls through. Other common home-buying conditions make deals contingent on successful inspections, appraisals, and status certificate reviews.
Clean offers are usually appealing to sellers because they simplify the road to closing. For this reason, a preemptive bid should be free of conditions. Word of warning: clean offers can open buyers up to risk, so be sure to discuss this step with your real estate agent carefully.
2) Do your research
Of course, the key to competing in the real estate market is often cold, hard cash. In other words: if you’re making a bully offer, you’d better be willing to pay a sum that will make sellers sit up and take note. At the same time, no buyer wants to pay significantly more than they have to. That’s where real estate research skills come in handy.
Your agent can figure out how much the home you want to buy is worth. To do so, they’ll look at the property’s features and amenities—along with recent sold and listing prices for similar homes in the area. Once they’ve come up with this number, they’ll help you decide what role it should play in your offer. Remember that an attractive bid will be significantly higher than the seller’s asking price.
3) Work with an agent you trust
Making a successful bully offer requires a great deal of skill and tact. If you don’t do it right, the seller could be turned off (and reject your bid out of hand). For this reason, choosing an agent who works well with sellers is crucial. We’re talking about a true professional—someone with a good reputation, who’s both courteous and focused on making the transaction a win-win for everyone involved. You have to believe that the bid you’re making is worthy of the seller’s time and consideration. Fortunately, a great real estate agent can help you every step of the way.
During the interview process, consider asking agents who you’re thinking of working with about their approach to competitive buying situations. Once you’ve found somebody you can trust, rely on their advice. While you’re ultimately the decision-maker, nothing can replace the wisdom of experience.
4) Be confident
Last but certainly not least, don’t be afraid to compete. Bully offers make some buyers nervous, and that’s understandable. After all, you’re making a bid before the date that was set by the seller. The good news? The worst that can happen is that your offer will be rejected. Even if this is the outcome, the seller will usually still consider it come offer night—which means you’ll remain in the running for your dream home.For this reason, choosing an agent who works well with sellers is crucial. We’re talking about a true professional—someone with a good reputation, who’s both courteous and focused on making the transaction a win-win for everyone involved.
Bottom line? Making a bully offer takes confidence. You have to believe that the bid you’re making is worthy of the seller’s time and consideration. Fortunately, a great real estate agent can help you every step of the way. They’ll make sure that your bid is compelling—and use their negotiation skills to boost your chances of success.