Bully Offer In Real Estate In Canada, & How Does It Work?
We find bullies only in our schools, colleges, and offices. But this is not true? You can find a bully in the housing market too. They will not hurt you or say anything wrong to you. They will make some offers for the property they intend to buy. We know such offers as bully offers play a significant role in determining whether you will get the house. Here is everything you need to know about a bully offers in the Canadian real estate market.
Source: Freepik
What Is a Bully Offer?
Let us begin with some of the typical bully offers extended in the real estate markets:
- “Mr. Seller, I know what you expect from your house. I know what will satisfy you. But I am here to offer you more. It is my offer, and you get an hour to review it.”
- “It might be true that you had not started reviewing offers regarding your residential dwelling. But I want to meet you within the next 60 minutes. I assure you will not regret it. I am not a bully, a buyer with ready money.”
- “My numbers are big. Way more than what you are expecting after seven days. I am not here to intimidate you, but I seriously want to buy out your property. Contact me within the next 50 minutes and see your fortunes going up.”
If you are an active real estate participant, you must have heard about some buyers ready to bypass every process set out by the seller. These desperate buyers often command and offer you lucrative deals even before a seller has reviewed the offers.
These are none other than the real estate bullies, who are notoriously famous for extending jaw-dropping buying offers. Such buyers often possess the following ideologies:
- A seller makes an offer as soon as possible, even before the date the seller of the property has stated that he will start looking for an offer helps eliminate competition as fewer interested buyers have seen the property till now.
- By offering a quick and lucrative offer, the other interested buyers:
- Get intimidated and cannot put up a competitive offer.
- Do not get enough time to complete the home inspection.
- Find it tough to explore their different financing options.
- The seller is only looking for an offer that exceeds their expectations. If he can get a “substantial number” so early, then there are high chances that he will accept the offer.
- You should avoid buying property in the bidding war as it attracts a high premium. Hence, a seller must make a bully offer as soon as the property gets listed to WOW the seller.
How to Make a Bully Offer If You Are A BUYER of A Property?
“There are some homes that impress us, and we just can’t let them go.,” said Thomas Wilkins, a new resident of the Greater Toronto Area who recently purchased a house via a bully offer.
Certainly, bully offers can help you in getting your dream property. But it is an art, and you must exercise caution while making them. Let us delve deeper and explore some of the best tips to make a perfect bully offer:
1. Surprise Your Seller
Enhance the effectiveness of a bully offer manifolds if you surprise your seller and the agent. This technique is successful because it gives the minimum time for the seller to contemplate and decide the right action.
However, you must know the rules prevailing in the Ontarian real estate market, which require the property agent to disclose to the potential buyers a pre-emptive offer you must have received.
2. Appropriately “Time” Your Bully Offer
A bully offer works best when a seller makes it within a few days (preferably a few hours) after the seller list the property on the portal for sale. It is because, in the initial hours of the listing, the seller is:
- Not aware of the true worth of his property and
- Not confident as he has not received those many offers
Further, if you are figuring out of making a bully offer just a day before the “offer night,” your chances of getting the property are slim.
3. Unconditional Bully Offer Works Best
Making an unconditional offer within a few hours of the listing is the best way to win a property. To do so:
- You must know the source from where you will arrange your funds
- You must have completed a home inspection beforehand
- It must satisfy you with the location
- You must have found out the prospects of the property and are determined to buy it
4. Give A Tempting Bully Offer
If you plan to extend a bully offer that is less than or equal to the market property price, then be ready to enter a bidding war, as the seller may not accept your offer.
Bully offers are notorious for startling the sellers by offering them money, which can be as high as $150,000 more than the asking property price.
A successful real estate bully is the one who never lets the seller of the property turn away, as he is getting a higher price from other buyers.
5. Offer A Shorter Irrevocable Period
The beauty of a bully offer is that it gives minimal time to the property seller to contemplate and evaluate options. Hence, after making an attractive bully offer to the property seller, you must create pressure on the seller by offering only a few hours, after which the bully offer will expire.
Further, it is a fact that most bully offers are short-lived and get run out within a few hours.
When to Accept a Bully Offer When You Are A SELLER of A Property?
Most bullies prefer to bypass the established process and try to buy the property even before the bidding war.
The intention is simple: they want to purchase the house at a price that is less than the price at which they could have bought the property in a bidding war.
However, sometimes accepting a bully offer can be beneficial for a seller. These situations are:
- Your neighbor has listed the property at the same time.
- The showings are slow and less than what you expected.
- The price offered is high and crosses your pricing strategy.
- The bully offer is definite. It does not request you for a home inspection nor requires you to furnish a status certificate.
Seller accepting a bully offer can be both boon and a bane. It is because you never know where a bidding war will head and how it will end. So, evaluate properly before deciding what is in your best interests.
