What Is a Pre-Emptive Offer? A.K.A Bully Offer
Monday Jul 04th, 2022
What Is A Pre-Emptive Offer? A.K.A Bully Offer
Have you heard the Term “Bully Offer” before? In Toronto’s hot sellers market this is a common and quite successfully used strategy. So what is a bully offer? and when do you use it? I'm Meegan Dennie, a realtor in the very competitive market of Toronto Ontario Canada and In this video I am going to explain to you, how to snatch up that house you want, before anyone else has the chance! :)
- What is a bully offer? It’s when someone decides to swoop in BEFORE the scheduled offer date, trying to secure the purchase of the home before anyone else has a chance to offer on it.
- For a seller to want to accept a bully offer, it has to be a pretty amazing Sale Price. One that blows their expectations out of the water!! The seller has to feel confident that this bully offer is the best offer that they're gonna get.
- Keep in mind, you are asking the seller to accept this offer instead of waiting to see what everyone else offers on the originally scheduled offer night. So they have to be very confident that they are not leaving any money on the table and likely won’t be receiving anything better than what’s in your bully offer.
- That being said, It’s not all about price though (although that’s 90% what it’s all about), there are many other things to consider and negotiated in an offer.
- It’s a Faux Pas to have conditions in a bully offer.
- Quick Story, I had received a bully offer on one of my listings. The price was GREAT, we wanted that price!! But it came with a 5 day finance condition. If we had accepted that bully offer as is, The length of the financing condition would have actually put it past our original offer date therefore, it would NOT have made sense to accept this bully offer with that condition. Are you still with me?
- As I stated, the seller needs to be convinced they will not received a better offer and although it’s mostly about price, you have to consider the risks of any condition.
- Accepting a conditional offer holds the seller to that offer and they cannot accept any other offers while the buyer is doing their due diligence. The risk here is that maybe the buyer doesn't qualify for the financing and backs out of the offer. If the seller waits for offer night, they may get an offer with a lower price or an equal price, but no conditions. You need to weight out the price vs risk and consider all factors.
- What else needs to be considered? The irrevocable time. You are going to want to put a pretty short irrevocable time on that Bully.
- What is an irrevocable time? It’s basically the time limit that the offer is available until. By putting a short time but also a long enough time so that the agent can review it with the owners. You are hoping that you can ward off any other people from offering because they are unprepared or too busy to complete an offer.. If you put a 24 hour irrevocable as an example, then everyone interested in that property has PLENTY of time to submit their offer. Does that make sense?
- Ok, also Don’t forget the sellers ideal closing date request.
- And the Big Kahuna - Bring that 5% deposit chq with the bully offer! Talk about Zero risk for the seller and that house is yours and it’s firm and they dont have to have all kinds of people walking through their house anymore and the stress is all done for both of you! That deposit chq is KEY.
And that is how a Bully Offer is done my friends! :)
Don’t hesitate to call me for anything real estate related In Toronto or the GTA.