Over the course of the last decade, and specifically the last five years, many buyers have been successful with “bully offers” when in the midst of a red-hot market, where houses are selling in multiple offer situations.

Well here we are in the spring of 2014, and I’m starting to think that bully offers are dying out.

Sure, we still see a handful of houses sell before their scheduled offer dates via bully offers, but I feel as though the overall effectiveness has been reduced to merely a fraction of it once was.

Let’s look at some of my recent experiences…

For those of you that don’t know what a bully offer is, allow me to explain.

Basically any freehold property listed in Toronto these days comes with a set offer date.  A house that comes onto MLS today, March 24th, will likely see offers reviewed next Monday, March 31st.

The MLS listing will always specify in the broker’s notes, “Offers Graciously Reviewed March 31st @ 7:00pm, Please Register by 5:00pm.”

As an aside, the “registration time” is meaningless.  If you register at 7:30pm, it’s not like the listing agent is going to say “no” to your offer.  But I digress…

Every once in a blue moon, I get a prospective new buyer who says, “I refuse to compete for a house.  I will not, under any circumstances, take part in any sort of bidding war.”

Call it a “bidding war,” or simply call it “the way it’s done,” but it’s almost impossible to be an active buyer in the freehold market today, and not run into multiple offers a few times, if not, every time.  I can’t help those people that refuse to accept current market conditions.  That’s all their is to it.

Like it or not, houses in Toronto are sold with “set offer dates,” and that’s just the way it is.

On that offer date, you may be competing against one, two, three or, ten other buyers.  And as we all know, the listing agent might elect to “send back” the top two, three, or ten offers, to improve.

So if you don’t like it, and you don’t want to play, you do have another option: submit a bully offer.

A bully offer, as the name hints, is an offer that is submitted before the set offer date, and often jammed down the listing agent’s throat, as a bully might do.

I’ve seen countless bully offers handled timidly, and they fail, each and every time.

Last week, I was offering on a small rowhouse on the east side, along with seven other agents.  The listing agent told me, “I received a bully offer this morning, irrevocable until 2pm.  Kind of strange.”

I’ll say it is!

A bully offer isn’t supposed to be submitted on the DAY OF OFFERS!  Whoever submitted that offer clearly had no idea what he was doing, and probably read about “bully offers” in the paper.

In my opinion, a bully offer should be submitted the very day the listing comes onto the market, in order to have the highest chance at being accepted.

If a house comes out on Wednesday, and is set to review offers the following Tuesday, then you can expect each and every day, there will be 7-8 showings, and there will be a public open house, cold calls for the listing agent, and a slew of interested parties.

If the listing agent accepts a bully offer, then everybody involved is upset.

Therefore, by submitting a bully offer on the first day of the listing, you allow the listing agent to sell the property while angering the fewest amount of people.  Do you, as a buyer agent, care if people are angry at the listing agent?  Of course not.  But you need to help minimize the fallout, in order to convince the listing agent to work with your offer.

Your offer also has to be “too good to turn down,” or at least you have to convince the seller it is.

Your offer also has to be “only good for tonight,” otherwise the seller will just wait for you to come back on offer night with everybody else!  This means there is always some sort of make-believe story that accompanies the offer, such as, “My clients are out of town all next week, and won’t be available to submit an offer on the scheduled night.”

More often than not, bully offers are turned down.

But once in a while, a buyer can be successful, and it means not having to compete on offer night, and, hopefully, getting the property for less than you think it might have gone for a week later.

This is the key to bully offers, in my opinion.

I have NEVER told a seller to accept a bully offer.  Not once, and I probably never would.  I feel that they’ll always do better on offer night, but as a buyer agent, it’s my job to try and convince the listing agent that they have to work with my offer.

If a house is listed at $729,000, and you feel it could sell for $870,000 on offer night, you submit a bully offer for $844,000, and try and get the listing agent to show it to the sellers.  If they don’t accept, then you have a pretty good idea of what their expectations are on offer night!

Last week, I submitted a bully offer on a property listed at $699,900.  We viewed the house only three hours after it hit MLS, reviewed the home inspection to our satisfaction, and then submitted an unconditional offer for $800,000, irrevocable at 11:59pm.

The offer was rejected.

I’m not crying sour grapes here, but I’m starting to think that in today’s 2014 Toronto market, bully offers are becoming a thing of the past.

First, consider that when I called the listing agent for a Riverdale property two weeks ago, just to ask a question, she immediately said, “Just so you know, we’ve already had three bully offer attempts, so please don’t waste your time.”

Second, I feel that sellers are in such a position of power, that there’s really no need to be pressured.

Third, and most importantly, I think sellers are starting to see bully offers as some sort of indication of a “bronze medal” price, or representative of what they’ll expect the top offers to start at, instead of what they should expect to receive.

Don’t get me wrong, there is still the odd house that sells via bully offer for a crazy, non-sensical price.  Recall that Yonge/Eglinton home, listed at $1,100,000, that sold via bully offer for $1,418,000.  A lot of us thought that house would end up in the high $1.2’s, and we laughed when we saw the price.

THAT is when a seller says, “Okay, I have to take this bully offer.”

But your goal as a buyer isn’t to pay $150K more than you otherwise “might” on offer night.  Your goal is to get the property for around the price you’d expect to pay, maybe less, but not have to compete with a dozen other people, and avoid that one Yahoo that could come along and blow everybody else out of the water.

So I’m slowly becoming of the opinion that unless you are in fact the Yahoo, you’re not going to be successful with a bully offer.

They’re just way too common, too many buyers have the same idea, and sellers are wise to the game.

When a listing agent tells you that three buyers have already tried bully offers, you know the cat’s out of the bag.

The market for single-family homes in Toronto is tighter than it’s ever been, and sellers know it.

I had a listing agent tell me last week, “The sellers prefer a flexible closing, with a clause stating that they can set their closing date between May 2nd and July 31st.”

Oh REALLY?

They do?

Would they also prefer if I punched myself in the head for their amusement?

Should I present my offer on my hands and knees?  Because that’s basically what Toronto’s market is like right now.  Imagine the strength of a seller’s negotiating position when they specify they want a flex-close in a 90-day window.  I’ve never been involved with anything like that before.

So when sellers have that much leverage, why in the world would they work with a bully offer?

I just don’t think it’s going to work anymore.

I still see it here and there.  I can’t give out the address of this one, since I’m going to slander the agent’s actions, but an “east end” house sold via bully offer on Saturday………to the listing agent’s own buyer!

Imagine bullying your own listing?  Can you even do that?

This property was scheduled to receive offers on March 25th, but the MLS listing was updated to say, “Offer Presentation Changed To March 22nd At 2:00pm.”

And then it was sold; promptly double-ended by the listing agent.

So there is a case of a bully offer working, but I think for every 100 bully offers attempted in Toronto these days, maybe one is accepted.

Everybody’s doing it.  And when everybody’s doing it, we can’t call it a “secret” anymore.

Buyers will have to accept that offers will be reviewed on offer night, and simply put their best foot forward, and cross their fingers like they’re kids again…