“Bully offers are a high-pressure sales tactic on the part of the buyer.”
A bully offer occurs when a home seller receives an offer before the date it is supposed to be for sale, to pressure an early sale.
“If a home listing includes an offer date, that’s the date on which all offers should be considered; an offer made before that date, which is known as a pre-emptive, or bully offers, should not be allowed. This will ensure that all interested buyers of a particular home get a fair shot at making an offer. For sellers, it means they will have a chance to work with their realtor to carefully and thoughtfully consider all offers without feeling like they are in a pressure cooker,” said Karen Cox, Ontario Real Estate Association president, which recently urged the Ontario government to ban the practice during its upcoming review of the Real Estate and Business Brokers Act.
The practice artificially creates a market and is not fair for the seller to face such pressure, said Cox to Neil Sharma at Mortgage Broker News Canada, and it also creates uncertainty for the buyer.
“It doesn’t mean it’s the best offer the seller will receive. They don’t know that because they haven’t received offers from interested parties and that really frustrates buyers because they haven’t had a chance to participate and that’s why we’ve recommended ending bully offers.”
But what exactly is it?
“Bully offers are a high-pressure sales tactic on the part of the buyer, designed to get you as a seller, to look at their offer quickly with little time to react or notify other interested buyers,” wrote Jeffrey O’Leary, Broker with Better Homes and Gardens Real Estate Signature Service in Mississauga, Ont.
“Holding offers gives your agent a chance to market the home and expose it to the most amount of buyers possible. However, on Friday night, after only one day on the market, your real estate agent calls to tell you that you have a bully offer and it’s only good until Friday at midnight. This is the meaning of a bully offer in real estate,” he said.
Generally, the offers are higher than expected and the seller may just want to be done with the selling process and accept the offer, but is it right for the government to allow them and potentially stifle a free market?
“While the proposal has the noblest of intentions in ‘levelling the playing field’ for home buyers, such a measure would only restrict choice and agency for home sellers, while overlooking a key compliance gap that has remained prevalent in the market,” wrote Penelope Graham, managing editor of Zoocasa.com on Huffingtonpost.ca.
They may not last if the Ontario government decides to outlaw them, but for one Toronto couple, a 2018 bully offer resulted in a final bid of $260,100 over asking, when the bullies ultimately upped their offers.
Clearly in this case, it pays to be bullied.