What is a bully offer? A bully offer, also known as a pre-emptive offer, is when the seller has set a date for reviewing offers and a buyer decides to make an offer prior to that date.
Why do buyers sometimes make bully offers? Usually, a buyer will make a bully offer on a home they love before the offer date because they have been looking for a long time and have lost out on many homes in competition or to someone else's bully offer.
5 characteristics of a good bully offer:
-Substantially higher than asking price
-Large deposit
-No conditions
-Has the seller's ideal closing date
-No additional chattels included
How do you know if you should make a bully offer on a home? As a buyer, there are disadvantages to consider when proceeding with a bully offer. You may be paying more for the house than you actually have to. If you wait for the offer date there may be no other interested buyers. If that were the case you will probably have overpaid for the house. On the other hand, there could be multiple offers on the offer date and you could be outbid by another buyer. The uncertainty of this situation is typically the reason buyers make bully offers.
How do you know if you should take a bully offer on your home? Every circumstance will be different, and the ultimate decision is the sellers to make. As a professional, I will analyze the situation carefully with my experience, skill, and care and advise you as to whether I think you should wait for the offer date or accept the bully offer. On a recent listing of mine, the seller received a bully offer for 10% over asking, I advised them to wait for the offer date and they were "over the moon" with joy that they chose to wait, they accepted an offer 22.5% over list price!!
What happens when the seller receives a bully offer? Ontario’s real estate rules require the property seller’s brokerage to notify all other interested buyers that a “bully” offer, is being considered. That notice allows other consumers to compete for the same property if they want to. If however, the bully offer has a tight irrevocable time, then there is usually not enough time for other buyers to compete for the property.
Why is form 244 Seller's direction re: Property/Offers, confusing to buyers, sellers and real estate professionals? There is much debate about what the form means and the legality of using the form. I am going to do my best to explain the form as I understand it.
In my opinion, seeing in the Realtor remarks on the MLS listing that the seller has signed form 244 is still not a guarantee that the seller will not entertain a bully offer before the posted date and here is why!
Form 244 is a written direction between the seller(s) and the listing brokerage for the conveyance of any written and signed offers on the property until a specific time and date. The form is intended to be used to postpone the date of which the seller will entertain offers, so as to give the home the most amount of exposure to the buyers in the seller's market. In a seller's market, giving your home the proper amount of time/exposure to buyers is paramount in generating the best price for your home.
What does the conveyance of offers include? In the pre-printed wording option on the form, the conveyance of offers includes but is not limited to the presentation, communication, transmission, entertainment or notification of any written and signed offer.
Form 244, has more than one option to direct the brokerage. The seller can either direct the brokerage according to the pre-printed wording in the form, which reads: NO CONVEYANCE OF ANY SIGNED OFFERS PRIOR TO “X” TIME ON “X” DATE. Or the sellers can choose to direct the brokerage for the conveyance of offers in whatever format they want. For instance, the seller can direct the brokerage that they will not look at offers until a certain date and time but that they would like to be verbally notified of the offer price of a written/signed offer.
Can the seller change their mind on the conveyance of offers once form 244 has been signed? Yes, if the seller gives the listing brokerage direction in writing then form 244 can be changed and the sellers can accept, reject, or counter an offer, or the sellers can change the time/date they will entertain an offer.