Today is Pink Shirt Day, which is a cause that we at Blu are proud to support. Aimed at raising awareness and preventing bullying among children and adolescents in school, Coast Capital will donate $1 to the CKNW Orphans’ Fund for every positive message shared on social media with the hashtag #pinkshirtpromise. As realtors, a big part of our job is building and managing relationships, which got us to thinking about how the idea of a bully translates into our daily work. Namely, we see the term used when referring to bully offers.
In the current and highly competitive market, it’s common practice for a listing realtor to set a date (typically a week from when the property was listed on MLS) for offers to be reviewed by their seller. This allows ample time for the property to be marketed, and for potential buyers to come through an Open House.
Cue the bully offer, which is an offer that is submitted before the set dates, in the hopes of ‘bullying’ the seller into accepting their offer before they get the chance to look at any others. Of course, in order for this to work, the offer has to meet a few conditions:
1) It will have to be high enough above the list price so as to convince the seller not to wait for other offers.
2) The seller must agree to look at the offer, thus nulling the original set offer date. A seller can choose not to look at the bully offer, and wait until the set day as planned.
3) The offer will need to be subject free, and a bank draft or deposit cheque will need to be on hand.
If a seller decides to look at a bully offer, their agent is obligated to notify every agent who has booked a showing and inform them of the change of plan. Bully offers usually come with a very short irrevocable, in order to prevent other buyers from putting together an offer in such a short period of time.
Which brings us to our next point – what might compel a seller to accept a bully offer? Simply put it is the fear of the unknown. If there is a time-sensitive motivating factor behind the sale of the property (a relocation, the purchase of a new property that closes in a month, etc), a bully offer with a price above asking puts all the pesky ‘what-if’ scenarios that run through a sellers’ head to rest. There is no sure-fire way to know what will happen on offer day or if the property will go into multiples. A bully offer provides a guarantee, but it is at the expense of other potentially higher offers.
Is it wise to accept a bully offer as a seller? There’s no blanket answer – it will all depend on the type of property you are selling, the neighbourhood that it’s in, the current market, and other factors. That being said, many bully offers end up being less than what would have been paid on offer night. In the highly competitive Vancouver market, desirable properties are almost certain to go into multiple offers, which is what is ultimately going to get you top dollar as a seller.
As a result, we usually advise our sellers to play by the rules, and not to succumb to the tantalizing allure of the bully offer. Nevertheless, bully offers are a reality of the real estate industry, so the most important thing that you can do is to work with an experienced agent who will be able to provide the best advice given your situation. Lucky for you, we happen to know a few.