We have finally come up with a term to accurately describe an all-to-familiar new practice in the real estate market.
Some people are still wrapping their heads around the “Hold-back on offers.”
Well, Bully Offers have taken things to a whole new level…
If I’m describing a property currently listed for sale, and I say “They’re holding back offers until November 29th,” and you don’t know what that means, well….you aren’t very in touch with today’s real estate market.
Over the course of the last four years, it has been extremely common, almost expected, that when a property is listed for sale, a pre-determined date to review and accept offers is chosen.
If a property is listed TODAY, for example, offers will likely be reviewed next Monday or Tuesday evening.
The purpose of this is to allow the property to be exposed on the market for a long enough time period, but it is also an attempt to solicit multiple offers on the property.
But as soon as “Hold-back on Offers” became common place and expected, a new fad took over the offer process in the real estate industry.
It’s called a Bully Offer.
When offers are being accepted on a property on November 30th, and you call the listing agent and say, “My client has put together an offer, and would like to submit it to you today, November 26th,” you are submitting a Bully Offer.
Simply put, you aren’t playing by the rules. The offer date has been set, but you refuse to oblige.
It could be argued that this is either exceptionally unethical, or deviously intelligent.
Here is an example. Your client has submitted offers on three houses in the past six weeks. He has “lost” on all three houses. When 123 Fake Street is listed for sale at $889,000, and you inform your client that there will likely be 5-6 offers and the property will sell for close to $1,000,000, you and your client decide not to go through the formal process of submitting an offer on the pre-determined offer night.
You procure an offer for $996,000, and call the listing agent. You tell the listing agent that your client does NOT want to wait for the offer date, and that he would like to present an offer ASAP.
This can cause all kinds of headaches for the listing agent.
His duty to his client, is to present any and all offers, regardless of “offer dates,” which are far from a firm practice. His client can refuse to review the offer, or he can choose to take a look.
If you were the home owner, wouldn’t you be curious?
But the listing agent, a GOOD and HONEST listing agent, would have to call every single agent that has shown the property, and inform them that there is an offer being reviewed before the stated offer date. If the listing agent doesn’t do this, he could be in serious trouble with the Toronto Real Estate Board. You can’t state offers are on the 30th and then sell the house on the 26th without telling anybody!
Now, if you are the home owner, and you get this offer for $996,000, you have to decide: Do I take this excellent offer, or do I wait until the offer date and see if I can do better?
That is the conundrum that home owners face with a bully offer. Because more often than not, that bully offer won’t be present on offer night.
The “what if” factor kills you! “What if I could get MORE on offer night?” Or, “What if I turn down this offer for $996,000, and only get $950,000 on offer night?”
From the buyer’s perspective, it’s more a question of why not. What have you got to lose? Why not offer now instead of later? Maybe they’ll take our offer! But the flip-side is always apparent; what if you offer $996,000 now, but on offer night, there were only two people interested, and perhaps the house would have sold for only $925,000?
You can’t play two hands in a game of poker. It just isn’t possible.
There’s really no way of knowing what the right or wrong move is, but you can take an educated guess, and be as well informed and instructed as possible, depending on the knowledge and insight of your Realtor.
Bully Offers are a common occurrence, and there is nothing in place to stop them from happening.
There is only ONE certainty that has arrived with this new practice of bully offers.
And that is simply that our already complex real estate industry has just gotten even more complicated…