As the London Ontario real estate market begins it’s shift toward catching up with the rest of the province, we begin to hear terms such as “Bully offers” or “pre-emptive offers” make their way in to our day to day vocabulary.
So what are they?
When inventory is low and demand is high we often find home sellers and their representatives listing properties for sale only to hold off on either showings or offers (or both) until a specified date and time. The purpose of this is to increase urgency and interest to generate multiple offers or “bidding wars” as they are commonly known.
This strategy proves to be very effective. Enter, the “bully” or “pre-emptive” offer.
Although the seller has said they are not allowing offers until the time provided eager buyers try to submit attractive offers to the sellers beforehand in order to secure the property prior to having to fight for it.
When accepting bully offers can be a good thing:
There are a few reasons why entertaining bully offers can be a good thing.
First off, as a home seller this is it. You’re off the hook easy. No more showings, no more leaving the house several times a day. No more cleaning up. No more nothing.
Second, it’s highly likely that the price is very good and conditions are low if none at all.
Third, even though there appears to be a ton of interest in the property… what if you wait until offer day and nothing comes? You could run the risk of ending up with nothing.
When it’s not so good:
Unpredictability is often the name of the real estate game. So, you accept this bully offer and it’s all over. However, there are mountains of buyers still waiting with interest in the property. Offer day could come and you could get several offers driving the price up even higher.
The administrative side can be ugly. You have offered the property for sale. It’s available online and there is a sign on the lawn. Therefore people have seen it and are anticipating a shot at the property. There are governing laws around being transparent and fair to all when offering a property for sale in the province of Ontario. So before accepting or entertaining any offers before the published offer date you must notify everyone who viewed and showed interest in the property that you will be looking at offers ahead of schedule. Allowing them the opportunity to decline or be given a chance to compete.
Depending on how long the home was listed for, you could be looking at a huge task. One you should not consider skipping. Fairness and honesty is something those that govern the real estate profession and it’s consumers very seriously.
So you see, there are many sides to the coin when it comes to bully or pre-emptive offers. You must choose what works best for your situation.
Whatever you decide, as a home seller or real estate professional be firm in your decision. There are repercussions if the rules aren’t followed. Besides that, playing fair is the only way to play the game.
Until Next Time…..