While having a team mastermind the other day we got chatting about “Bully Offers”, and it quickly became clear as everyone shared a recent story about them that Bully Offers have become an icon of the current COVID-19 era real estate market here in Ottawa.
Let’s begin by explaining the term “Bully Offer”, also known as a “Preemptive Offer” or “Early Offer”.
You’ve probably seen properties for sale that state “Offers accepted X day at Y time.” This is a strategy used by real estate agents to build interest in a property and cause multiple offers in hopes of bidding up the price. Technically speaking this condition is by the direction of the seller(s), and…the sellers have the right to rescind this direction if they choose to.
A “Bully Offer” is when a real estate agent representing a buyer brings the seller(s) agent an offer before the time/day indicated. At which point the seller(s) can decide if they want to look at offers now or stick to their original date & time.
Spoiler: they often decide to start considering offers.
So what does that mean for the seller(s) and their agent?
- Sellers need to give written direction to their agent to change the process.
- Then the agent for the seller(s) must notify everyone who has expressed interest in the property that they are now considering offers & update the MLS® system and other listing sites to reflect this.
What they don’t have any obligation to is the amount of time needed.
This was the situation that got our team so animated, (details have been changed to protect privacy) a property listed for sale planned to consider offers on Saturday. Some of our agents had shown the property, or were booked to show it.
Wednesday night at 7:40pm the buyer’s agents received notice that offers were now being considered…at 8:00pm. With little more than 20 minutes to prepare and submit an offer most missed the deadline. Of the 22 agents we know that were planning on brining an offer none managed to submit before the property was sold. Originally listed for $425,000 it sold for $450,000 which sounds great for the seller(s)…however of the other 22 agents there were some that had planned to make offers of $460k, $475k and $500k. So did the seller make an extra $25,000 or lose out on $50,000?
That’s what makes this a complicated subject. While the seller’s agent “technically” did not do anything wrong they may have cost their seller money, and they definitely annoyed many of the agents they have to cooperate with in the future.
On the other side of the coin, we now have many buyers who lost out on a property they really liked, and now believe that “no offers considered until” can be considered a suggestion rather than a hard fact. This, unfortunately, lies with the listing agent to qualify based on the direction they received from the seller and how to best lookout for their interest and desired outcome.
If you’d like to understand bully offers better or discuss the details of how they work for buyers or sellers, or your situation just reach out we’d be happy to chat about it.