Tuesday 22 May 2018

No one likes a bully.. usually.

As discussed yesterday, [offer deferrals] can be a cause of frustration for buyers.  Pre-emptive offers add an element of uncertainty to the situation.

A property that includes an offer deferral may also state that pre-emptive offers are welcome, or not welcome.  What the seller is saying is that they are holding offers at a certain time, but they are willing to entertain offers early if a buyer doesn't want to wait for the designated day and time.  The attempt to push it through is why these are often referred to as "bully offers".  If the listing says they are not welcome, then the seller is indicating a firm stance on the offer presentation date.

The benefit of making a bully offer, if they're allowed, is that you don't have to wait.  The problem, though, is that you have to motivate the seller to accept your offer rather than waiting as planned.  If the seller thinks they can get a bidding war for a higher price and probably firm sale, then your offer has to meet their expectations.  Which means a high offer and with no conditions.  There's an obvious risk to any such offer, but the seller is unlikely to accept anything less.

These days, even paying a high price aside, one doesn't necessarily gain a huge competitive edge with a pre-emptive offer anyways.  Before they became more commonplace in the market, there was less regulation of how they were handled, so you could make an offer early and potentially win without anyone else having a chance to make an offer.  In recent years, though, real estate boards and regulators have made moves to make the game a little more fair. 

Locally, if an agent has a listing with an offer deferral where the seller decides to entertain an early offer, the listing agent is expected to let everyone else with a registered offer know (legally required anyways) but even to notify anyone who has shown the property or has a showing booked for after the new offer timeline.  This gives everyone an opportunity to move up their viewing if necessary and come in with an offer on the new date - no one surprised when they call the day stated in the listing only to find out it sold two days ago.

If you're in a good position where you can make a strong cash offer without conditions, then a bully offer could still work to your benefit.  Even though everyone has an opportunity to come in, most buyers and agents understand that a bully offer will usually be high and firm, and may decide to hold off and see what happens.

As with anything, you'll want to thoroughly discuss the situation and options with your real estate professional, based on your goals and circumstances.

No comments:

Post a Comment