We came across this excellent article written by Geoff Hartel on his Blog GeoffHartel.com on Bully offers, and wanted to share a small excerpt of it since they are on the rise, especially in the GTA in recent years.
“… So what is a bully offer? Quite simply, it is an offer to purchase a property in advance of the pre-determined offer date. It is is essence a pre-emptive offer. In our competitive real estate market, when a house or a desirable condo/loft is listed for sale on the MLS there will be a date (usually 7 days) from the date of listing when any offers will be reviewed by the seller. In theory, this period is supposed to allow sufficient time for the property to be marketed… for open houses to take place etc. In reality, it allows more buyers to see the property with the hope that there will be loads of interest and multiple offers to purchase come presentation night.
For a bully offer to work there are three key factors:
1) A buyer willing to offer significantly more than the list price without being in competition (or so they think).
2) The offer price has to be high enough for the seller to be satisfied and/or happy with.
3) The offer will need to be free of any conditions (Home Inspection/Finance etc.)
So Why Accept It?
Why do sellers accept a bully offer? Quite simply because they are happy with the price. No secret there. Mind you, if they accept that offer they will never know what the outcome would be if they had waited for the night offers were originally scheduled to take place…”
To read the rest of this in depth article, please click here.