Last week, I was standing out front of an east-end home with clients who were interested and who had a few questions about the process.

“So offers are on Monday?” they asked me.

I confirmed that was the case.

“Would we be told if an offer came in ahead of time?” they asked.

I again confirmed this, but added, “Unless it’s a really bad agent not doing his or her job, but yeah, any bully offer registered on the property should trigger an email from the listing brokerage to all of the buyer agents.”

“So we would have time to respond?” they asked.

“The deadline on that bully offer, or the ‘irrevocable date,’ could be an hour or two hours, you never know.  But in this market, if a seller elects to work with a bully offer, and more importantly – the listing agent decides to upend his or her entire listing and offer process to work with the bully offer, they’re going to ensure that there’s at least a few hours of irrevocability so that other buyers can respond.”

The clients nodded along.

Then I summarized what we had just discussed by explaining something that I detail to all my buyer clients when they’re asking about offers on a property that has an offer date:

“You guys can submit an offer on this property in one of three ways,” I told them.

1) You’ll make an offer on the scheduled offer night.
2) You’ll make an offer in response to a bully offer submitted by a competing buyer ahead of the scheduled offer date.
3) You, yourselves, will make a bully offer ahead of the scheduled offer date.

Those are the three ways in which anybody makes an offer, for a property that has a scheduled “offer date” ahead.

The buyers didn’t make a bully offer and aren’t going to.  There also isn’t any bully offer registered.  If these buyers are going to make an offer on the property, it will be on Monday night with everybody else.  “Everybody” being one, two, or twenty offers.  That’s how it goes.

For the record, I’m a big fan of using the “bully offer” as a tactic in a hot market.

The market we’re in right now is “hot” but I feel it’s about to trend into “red hot.”  And in times like these, a bully offer can be used as an effective tool to purchase a home, often for less than you think or fear it might have sold for on the scheduled offer night.

And as I have explained before many times on TRB, if you submit a bully offer that is not accepted, then you now have some inside information regarding price expectations on behalf of the seller.  That’s information that no other buyer has.

On Thursday, I was showing a North Toronto home to a different set of buyers.

This home was priced at $1,498,000 and I told the buyers in my initial email, “This has $1,800,000 written all over it.”

The house was a semi-detached but on an extremely wide 27.48-foot lot.  The “average” North Toronto semi-detached is probably somewhere around 23-24 feet, and many are on 20’s or less.  Throughout the central core, it’s not unusual to see 16-18 foot semi-detached lots.  There’s a property in the Junction which is going to fetch $2.2-$2.3M next week and it’s on an 18-footer!

Suffice it to say, this 27.48-foot lot was impressive.  The property had legal front pad parking, it was within a great school district, access to transit was exceptional, and it checked all the boxes for my clients.

It didn’t have flash, however.  The dated bathroom might deter some buyers but my clients are savvy and they knew that in order to get a house like this in their price range, there would have to be drawbacks that bothered other buyers, but that didn’t bother them.

The kitchen was also closed to the dining area, whereas so many homes in this neighbourhood feature open concept.

Other than those two items, it was absolutely turnkey.  And thanks to those two items, we figured maybe, maybe the market would allow it to fall to us in our price range.

I’ll be honest: I figured that with our absolute max pre-approval at $1,800,000, we had a fair chance at being successful on an offer night.  Based on the market in this area, and the market in general, I could see somebody paying a whole whack more for the house.

My clients and I stood in the basement of the house and discussed the offer process, ironically as another group of buyers stood outside waiting for their turn to view the home.

We discussed the price range for this house; essentially anything from a floor of $1,750,000 to that “omg” price of, say, $1,950,000, and figured that we had a shot at $1,800,000.

They asked, “If a pre-emptive offer were received, would we be notified?”

I confirmed that we would be.

I explained that this could happen, and suggested that if we were interested in making an offer next week on the scheduled “offer night,” then we would want to be prepared to compete if a bully offer were submitted.

We saw the house at 2:00pm and by 2:30pm, we were standing out front of the house, talking about the home inspection, discussing the closing date, and outlining which chattels and fixtures were included in the sale and which were excluded.

I said, “Okay guys, I’m heading to the office and I’ll email you with that info in an hour or so.”

We parted ways and I got in my car and began to drive.

About six or seven minutes later, I checked my phone and I saw an email from the listing agent for the property we had just viewed with “Offer Instructions.”  I scrolled down and read the usual: the seller’s desired closing date, the inclusions/exclusions, process for offers, the listing agent doesn’t have his own, etc, etc.”

“Why is he sending this now?” I wondered aloud.  Offers were six days away.

At the next stoplight, I checked that email again and this time I noticed the most important part of the email:

Pre-Emptive Offer Registered. Offer Date Changed To Tonight @ 8:00pm. Offer Instructions Herein.

Great.

Great?

Great!

What began in my mind as a sarcastic, “great” turned into a literal, positive, gleeful, “great.”

This could work in our favour.

Unless somebody blew the doors off, this could actually prevent extreme price escalation on an offer night.

I know the listing agent quite well so I called her and said, “Two Million?”

She laughed.

“Two-point-two,” she said, not giving anything away.

“Is it good?” I asked.

“Good enough that my sellers want to move up their offer date,” she said, again not giving anything away.

“I don’t want to waste my time,” I told her, which is a classic line that I loathe when agents use it on me.  But she’s no dummy.  She knew what I was angling for and she knew she’d have to pull me on side.

“My guys can go to $1,800,000, but I don’t think that does it,” I said, strategically.  “Maybe we just sit this one out?”

“Bring me the offer, David,” she said.  “You know I want to work with you.”

I told her I’d do my best and we ended the call.

Now, there’s a good chance that in a situation like this, the listing agent is simply baiting me.  She could have $1,900,000 and she simply wants my offer to have leverage.  I have to know this and acknowledge this going in to any situation like this.

However, and maybe parts of the general public don’t want to hear this, but too bad.  In our industry, there are 72,000 agents licensed under TRREB and maybe a few thousand do 99% of the work.  There’s a professional courtesy, respect, and working relationship among many agents, and it’s not uncommon to treat one agent differently than another.

Boo-hoo, if you don’t like it.

I’m sure in your industry, there’s zero preferential treatment.

But this agent and I have known each other for a long time in a professional manner and we work well together.  She knows that my buyers, working with me, would be serious.  They would close the deal.  They would have a deposit.  They would represent a perfect scenario for her seller-clients, and that’s working for your client, right there.  Know who’s on the other side of of the offer table because that’s part of the job.

Now, I had to let my clients know!

It was a classic, “Hey guys, I have good news and I have bad news…”

I told them that while the bad news was, there’s a bully offer, the good news was, they could buy this house tonight!

They were so chill.  Honestly.

There was no emotion.  It was just a series of checks and balances for them as they said, “What do we do now?”

“Would you like to compete?” I asked.

“Yes.”

“Would you like to submit an offer for $1,800,000?” I asked.

“Yep.”

“Are you able to get a deposit cheque in the next two hours?” I asked.

“Sure, if you need us to, we could.”

Their level of chill and ability to think critically at a time when most people can’t help but experience emotions – excitement, anxiety, nervousness, et al, was what enabled them to be successful.  I can’t stress how important this was.

I began to draft the offer and he sprinted to the bank before it closed to get a deposit cheque while she went through the home inspection and the draft offer, and we regrouped in an hour.

“I can only get a cheque for $51,000,” he told me.  “Should I bother?”

A deposit is typically 5% of the purchase price, or more in a market like this.  Ideally, we’d have had $100,000, but in a situation like this, it’s better to have something than nothing.

“Please get the cheque and we’ll make it work,” I told him.

A short while later, we went over the offer, signed it, and prepared to move forward.

The bully offer had submitted an irrevocable of 9:30pm so the listing agent wanted offers at 8:00pm.

We waited until 6:00pm to register our offer and then submitted at 8:00pm.

I called her and said, “I sent my offer over.  I’m gonna put my daughter to bed now.”

She said, “Yeah, I’ve got two kids in the bath over here, my phone is blowing up, there’s a third offer now, maybe a fourth.”

I asked, “How are we looking?” and she said, “Your price is good, I’ll keep you posted.”

I actually was doing bed time at home, by the way.  It wasn’t a rouse but rather a way to further connect with the listing agent.

She called me back and said, “Hey, I’m just ducking out of story-time here.  Can you revise your irrevocable to 11:00pm?  You gave me 9:30pm and I’m not going to speak to the sellers until 9:30pm on Zoom.”

I said, “No problem, consider it done,” and that’s simply providing my word over a signed document, but she took it as golden.

I put my daughter to bed, which took longer than usual, and at about 9:10pm, I sent my clients a revised offer to sign, extending the irrevocable to 11:00pm.

The listing agent called me around 9:30pm and said, “Hey, how come your deposit is so low?”

I could hear her kids in the background.  Some things never go to plan.

“You got your handsful eh?  Listen, my guys could only get $51,000 today in such a short time, but the money is there,” I explained.  “You know my guys are serious,” I told her.

She said, “Yeah, for sure, I told the sellers you’re a solid agent.  Your buyers are solid.  They’re just looking at the other offer with a huge cheque and wondering why yours is low.”

At this point, the discussion was about the deposit and not about the price so I figured we were looking good.  So I suggested something that might bridge the gap.

“Why don’t we re-submit our offer with a clause in Schedule A saying we’ll pay a further sum of $49,000 within three business days, to bring the deposit up to $100,000 in total?”

“Do it,” she said.  “I’ll circle back with you shortly.”

I revised our offer once again and sent to my clients to sign, which they did.  I then sent it to the listing agent.

She called me back and said, “The other offer revised; they came up in price.”

I knew that was on the table, of course, but my guys were maxed out.

“You know I’m maxed here,” I told her.

Short of having the buyers call my mortgage broker and get the thumbs up to eke out another $20,000, we had no moves when it came to price.

“I know you are,” she told me.  “It’s probably fine,” she said.  “These other guys don’t have the right cheque,” she told me.

“What do you mean ‘the right’ cheque?” I asked.

She said, “Well, they did bring a big, fat deposit cheque, but it’s made payable to Century 21 Ltd Brokerage.”

The problem?

The house was listed by Royal LePage.

She told me, “They made an offer on a house on Monday night but they didn’t go back to the bank to re-deposit the funds and then get a new cheque made payable to our brokerage,” she told me.  “So we’ve got a cheque as a ‘sign of good faith’ but it’s nothing we can cash tomorrow,” she said.

I was starting to feel really good about our chances, even as she said, “My phone is absolutely blowing the fuck up right now.  I’m not answering.”

I went upstairs and changed into jeans and a t-shirt and went and got my coat.

Worse case: I felt stupid later.  Best case: I was getting a head start.

I got in my car and started to drive to my clients’ condo, waiting for my phone to ring.

The listing agent called me.

“The other offer came up and they want to come up more,” she said.

More would mean higher than our price, and we would be beat.  Dammit.  Now I was just out for a late-night drive…

“But the sellers don’t like this Century 21 cheque situation,” she said.  “Like, if they beat you by $10,000, who cares, right?  With no cheque, it’s like, fuck it.  Let’s take David’s offer and get his cheque in hand and get this deal done!”

And with that said, I made a right turn onto my clients’ street and pulled up in front of their condo.

“Congrats, buddy!” she said.  “I”ll send you the accepted offer shortly.”

I called my clients and told them we’d won and that I was coming by to pick up the deposit cheque.

“Let us know when you arrive,” they said, to which I had to respond, “Um, the thing is, I’m actually already here…”

I got the deposit, drove it to the listing agent’s house, and we shook hands in what has become an “old-fashioned” way of doing business, but which I think is making a comeback as we get into a very complicated market where personal relationships are going to help agents consummate deals.

The next day, my clients obtained the “further deposit” of $49,000, submitted it to the listing brokerage, and we put the finishing touches on a solid purchase.

Who am I to say that this property would have sold for more on offer night, right?  But I think it could have.  Or would have.  And if it did, my clients never could have competed.”

In the end, the fact that somebody else submitted a bully offer on the house, and started the whole process a week early, is what helped us get the deal.

Well, that, and my relationship with the listing agent, my buyers’ ability to swiftly obtain a deposit cheque, and the desire of a seller to work with a buyer agent and buyers who showed up to the table with all the requirements to lock in a deal.

This was a solid buy for my clients and I honestly couldn’t be happier for them.

So if you’re a buyer out there and you’re afraid of the big, bad, bully, well, don’t be.

They’re not that tough.  They get beat all the time.

Don’t be afraid to get in the sandbox with them and mix it up…