Is a “Bully Offer” a Relevant Tactic in Today’s Market?
Q: My partner and I would like to buy a home, and don’t want to miss out when we find the right one. We’ve heard about “bully offers” where you submit an offer before the deadline, but we’re not sure if this is relevant in the current slowing housing market. Is it better to wait a few weeks before placing an offer?
A: Every tactic is always relevant in every market. A wise person once said to me “all is fair in love and real estate”. Considering we are in one of the hottest real estate in the world, I say check your ego at the door and do what it takes to get the job done. When working as a buyers’ agent, I find that bully offers aren’t usually well received by the listing representative, but sometimes being friendly is counter-intuitive to doing your diligent best for the client.
Bully offers have generally been used because of the panic that buyers were in due to the low amount of inventory available. When buyers lose out over and over and over again due to the crazy, unregulated market, anxiety kicks in and the thought process turns to not playing by the “rules”. Now that panic has subsided, so the place for bully offers as a tactic has diminished – but not entirely.
If you’ve identified a property that is to your liking, and your agent has assessed that it is at a comfortable market value, then proceeding with a bully offer can still be a relevant tactic. In fact, with the market shift, it’s probably more likely to be successful. Sellers are often not using the scheduled offers tactic anymore, so often times they are simply accepting offers as they come in. So your early offer will no longer be considered a “bully” one. If you do come across a listing where they have scheduled a date and time for offers, a bully offer could still be received a little more favourably due to the softening market.
If the property you’ve identified isn’t at a comfortable market value, then it’s likely best to wait until they reduce their price. I never begrudge a seller from trying to get maximum value for a property. But reality is reality, and a seller can’t change the fact that if they wanted to sell for maximum value they probably should have sold before the market shift and the foreign buyer tax. With the market shifting, it’s unlikely they will be able to sell for above market value.
There is always the chance the buyer comes to them without representation or with unqualified representation. If the buyer doesn’t need financing or has a high down payment, they may not meet up with an appropriate financing due diligence when completing the purchase. Owning a real estate property gives the seller the right to sell it for whatever they deem fit, but you also need a buyer to agree to the price. It’s a fine line sometimes.
The need for bully offers has certainly diminished, but this doesn’t mean it’s not a relevant tactic. Every tactic should be analyzed and used if applicableto your situation. After all, we are talking about purchases worth hundreds of thousands, if not millions of dollars. You should never be afraid to rock the boat in a real estate transaction. As long as it brings you to a conclusion that is in your favour, every tactic should always be on the table.