If you’re selling your home for the first time, you’re probably learning a lot about the different kinds of offers you might receive. Conditional and unconditional offers are terms you might be familiar with, but a less common one is the bully offer. Here’s what it is and why you should be aware of it.
What is it?
If you’re in a competitive market like Toronto you might have heard of the term, as it’s most common in expensive cities where the market is hot. This is when someone makes an offer high above asking, before the seller’s offer date, with no conditions and a short expiry—therefore forcing the hand of a seller to take the offer lest they risk losing a significant chunk of change. Similar tactics have begun happening in the rental market, where would-be renters offer to pay more than the listed asking price in hopes of securing a unit in a highly competitive market.
Why do this?
In a hot market, if you have the expendable income, it allows you to jump ahead of the line and hopefully get the home you want.
Why are some agents calling for a ban?
In Ontario, many agents are calling for a ban on bully offers as it would give sellers time to consider offers from everyone, and allow buyers to make a fair offer on homes. Bully offers essentially favor the richest and leave those with less buying power in precarious housing situations. But not all agents agree they should be banned. Some would prefer for sellers to be upfront with potential buyers when they receive a bully offer so they can move on to other properties without wasting time on a property they have no chance of securing.
What‘s the upside?
As it stands, it is up to the seller to decide if they will accept a bully offer or not—so the power is still in the sellers’ hands. If you are looking to sell quickly, you might absolutely love a bully offer, but if you’ve just started looking for a new home to move to, or you’re in the process of building a new home from scratch, a bully offer might be absolutely unappealing to you, and you can easily decline it.