Bully offer: What should the home seller or buyer do?
What is a bully offer?
By definition, a bully offer or preemptive offer in real estate is meaning that the offer that buyers bring in before the offer presentation date or even before the full listing.
When does a preemptive offer occur?
A preemptive offer in real estate commonly occurs in the seller’s market where the property is in low inventory, the listing price is engineered low enough to entice more potential buyers to bid on a preset presentation date.
- The buyer wants to circumvent the bidding war or has a strong motivation to buy this property.
- The bully offers may share the similarity in terms of aggressive price,few or no conditions, and shorter irrevocable time.
Pros and cons of a bully offer
As a buyer
- You may avoid the bidding war, lessen your stress of waiting for the bidding day and circumvent the competition.
- But you may overpay, and you may have to place a firm offer without any conditions, which may cause uncertainty and potential risks.
- You may still face multiple offers. After your offer is registered, the seller’s agent would most likely contact the potential buyers who have viewed the property and invite them to offer sequentially.
- Your offer may get rejected though you may have a bit more understanding of the seller’s intention.
As a seller
- You may skip the marketing preparation if the offer comes earlier before the listing.
- You may sell the property faster at a satisfactory price since the bully offer often is aggressive in price and condition.
- You may be in peace of mind earlier and not be dragged into the bidding night.
- However, the cost to you is that you would not know whether you can sell higher on the bidding date.
Should the home buyer initiate a bully offer?
Whether to start the preemptive offer depends on your circumstances, your motivation, your willingness, and your affordability in both money and risk.
If you decide to further proceed,
- You would closely work with your realtor to have a thorough analysis of the market situation and generate a strategy of balancing the offer price and offer conditions.
- Your irrevocable time would be short enough so that the seller agent won’t have much time to shop around, but good enough so that the seller has a reasonable time to respond.
- Your terms and price would be generating serious interest from the seller.
Your bully offer may be attractive enough to close the deal or be declined. You either can walk away or wait for the bidding day to present your offer again.
Should the home seller take the bully offer?
Whether to take the preemptive offer is up to you when selling a home. The home seller may accept the offer, negotiate via a counter-offer or reject the offer and decide to wait for the bidding day.
The factors that the home seller would consider whether to take a bully offer
Price and condition
If the price hits the seller’s sweet point and it is a firm offer with no condition, and the seller is not that greedy, why not take it and start your other plans earlier.
Your attitude towards uncertainty
If you decline the preemptive offer, you may finalize, on the bidding day, a lower offer, or an offer with the same price and conditions, or a better offer.
Your valuation toward the time saving and worry-free since the bidding day may be intensive, hectic, and stressful.
The booking showing activities and neighborhood activities
By reviewing the showing and booking number, and the new comparable listing from the neighborhood, you may make a more informed decision.
If you don’t want to be bothered by the bully offer, sign an appropriate form( Orea 244) indicating no notices of any offer from the listing agent.
- A bully offer has an impact on both buyer and seller, it is up to you to make the call.
- In addition, there are advocates banning this bully offer since it may create unfairness to the other buyers who have spent time searching and showing but end up knowing the property has been sold ahead of the presentation day.