What Is a Bully Offer?
You may have heard the term “bully offer”, but aren’t quite sure what it means. A bully offer is a term in real estate that refers to a kind of bid, or offer, that is made by incredibly eager buyers. Bully offers are also known as pre-emptive offers. These typically occur in very hot selling markets. A bully offer is put forward by a potential buyer before the offer date that you, as a seller, have set. Often, a bully offer can even occur before the property is listed on the Multiple Listing Service or MLS.
When you are selling your home, you will usually set an offer date, which is the earliest date that you will begin to look at your offers– meaning that you would not begin to consider any bids prior to this date. This will help you to layout all of the offers you have received and compare them in order to get the best deal. With a bully offer, the buyer will generally include a date by which they expect a response to their bid, in an attempt to get around this offer date strategy. The reasoning is that you may feel pressured or compelled to accept this offer without waiting to see what else comes along from other potential buyers out there.
- What Is a Bully Offer?
- Risks and Rewards of Bully Offers
- How to Decide if You Should Accept a Bully Offer
- Frequently Asked Questions
Risks and Rewards of Bully Offers
Of course, there are pros and cons– risks and rewards– to bully offers. They do go against the entire reasoning for setting an offer date in the first place, so to buyers, they can often feel pushy or manipulative. However, this type of offer can also work in your favour under certain circumstances.
Firstly, if you have received a bully offer, it is likely to be a high offer– after all, the buyer needs to incentivize you to choose their offer early, rather than waiting to see if other offers roll in. Typical bully offers are much higher than the original asking price of your home in order to motivate you to accept. If this is the case with the bully offer that you receive, you may decide that you are not likely to receive any offers that are competitive with this one, and decide to accept. Then, you are effectively done with the sale of your property as well and do not have to drag out the process any longer.
On the other hand, if you accept a bully offer, you will never know exactly how much you could have received from other interested parties if you had waited. Whether or not you decided to accept a bully offer, you may be left feeling regret over potentially losing out on a better bid!
At the end of the day, though, having a bully offer put forward for your property puts you in a good position, because it means that you have more options to consider. It may be stressful when trying to make that final decision, but getting a bully offer is truly a step in a good direction.
How to Decide if You Should Accept a Bully Offer
Whether or not you accept a bully offer will largely depend upon your individual situation. However, there are a few things, in particular, that should be taken into account when you make this decision, as well as action steps that you should take.
One of the first steps that you should take is that you should speak with a real estate professional– like your realtor. Specifically, this individual should have experience with navigating previous bully offer experiences so that they can help to guide you through your own. They will help you to weigh the pros and cons, as well as make you aware of any potential long-term outcomes.
A seasoned realtor will also be able to use their market knowledge, research, and expertise to assist you in predicting the likelihood of you getting a comparable bid– or one that is even better!– later on, if you were to wait for your offer date. Of course, if the most recent market data shows a high probability that you will receive an equal or better offer, it is best that you wait.
Just as a realtor will help you with negotiations with regular offers, this individual will help you to navigate bully offer negotiations as well, should you choose to accept. For instance, if they feel that you may be able to submit a counteroffer to the bully offer since these buyers are so eager, they may advise that you do so as well in order to get the best possible offer.
Should You Accept a Bully Offer
Accepting a bully offer is a very personal, individual decision. There is no right, one size fits all answer to the question of whether or not you should accept your bully offer. Both buyers and their agents are aware that, in order to entice you to accept their offer in the first place, they will need to make it an impressive deal for you. For this reason, bully offers to tend to be very good offers, usually offering significantly above the asking price and with few– or no– conditions on the sale of the property.
You, as the seller, should know the market value of your home before you even put it on the market. If you do not, you are setting yourself up for failure or for mistakenly accepting what actually turns out to be a lowball offer. When it comes to bully offers, this will help you to determine whether or not the bully offer is worth taking. For instance, if your property’s market value is $600,000, but you receive a bully offer for $575,000, then it is not, in fact, a good offer. In this case, it would be in your best interest to let the process play out instead and see what other offers come in.
When Is Accepting a Bully Offer a Bad Idea?
There are certain circumstances where accepting a bully offer is not a good idea for you and your property. For example, if the offer has conditions on it, meaning it would be sold conditionally, you would not want to put all of your eggs in one basket and accept this bully offer before your offer date. Also, if the bully offer is not very high, it does not make sense to accept it. If you are already receiving lots of great feedback and have had many tours of the home, it may not make sense to accept a bully offer, either– because in this case, you are likely expecting a large number of offers on your offer day.
- The offer is not that high
- The offer has conditions on it
- You are expecting many offers on offer day
When Is Accepting a Bully Offer a Good Idea?
On the other hand, there are a particular set of circumstances that makes accepting a bully offer a good idea. Many of these are the inverse of the circumstances explored above, which make it a bad idea to accept a bully offer. For example, if the bully offer is incredibly high and significantly above the asking price, it makes sense to accept because you are less likely to receive other offers that are competitive with this. If the offer is firm and does not have conditions attached, it may also make sense to accept. Additionally, when showings and traffic through the home are slow, you may not be able to expect as many offers on your offer date. This would be another circumstance that points you towards accepting a bully offer, rather than waiting it out.
- The offer is very high
- The offer has no conditions attached
- You are not expecting a lot of offers
Frequently Asked Questions
Should I accept a bully offer?
This depends on the market and on your situation. However, if you do accept a bully offer, you will never know how much you could have received from other potential buyers if you had waited for their bids to come in. You may find yourself regretting doing so because you feel that you may have missed out on a better bid.
How do you win a bully offer?
To put in a successful bully offer– one that is accepted by the seller– you will need to put forward a competitive offer that sellers will want to snap up, rather than waiting to see what is offered from other potential homebuyers who are in the market.
Can I outbid an accepted offer?
Yes, technically you can outbid an accepted offer. If the purchase offer has yet to be signed, the seller could accept a higher offer. On the other hand, a seller cannot cancel a contract that is in compliance simply because they received a better offer.
What is a pre-emptive offer?
A pre-emptive offer is an offer that is put forward before a property is even listed as being for sale on the Multiple Listing Service, or MLS.