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If you're a real estate agent, then you know that making a bully offer can be the key to landing a property – let's look at what bully offers are and how you can use them in your favour when negotiating with sellers.

What is a bully offer?

In a hot market, seller agents typically set up a specific date and time in which potential buyers can submit offers on a listing to allow enough time to market the property, and encourage as many offers as possible. Unfortunately, buyers often find themselves competing against multiple offers for a property when demand exceeds housing supply.

Bully offers are simply when a buyer makes an offer ahead of the offer submission date. Essentially, you skip the line of other interested buyers and ‘bully’ others out of the market. This can be a great way to get the seller's attention and make them more likely to accept your offer. However, you need to be careful with bully offers, as they can sometimes backfire.

Buyer Cons of a bully offer

Offering too much. Bidding early can push you ahead of others, but if the house is met with a less than enthusiastic response you may find yourself competing against no-one. And locked into paying more than the house is worth and would have ever sold for.

Going in blind. Some buyers will buy sight-unseen in order to get ahead of other buyers waiting for open houses. Real estate photography and video tours are designed to show the best of a property, and buying blind can mean buying a home that may not meet your expectations.

Skipping the inspection. Inspections are designed to protect buyers. However, it’s one of the most popular contingencies that buyers will drop in a bid to make their offer more appealing to sellers. In addition to offering too much, skipping an inspection could mean you’re locked into buying a property with hidden and costly issues.

Buyer Pros of a bully offer

Stand out from the crowd. Beating the crowd in a market where demand exceeds supply can be priceless. In hot markets, buyers often find themselves frustrated with being outbid again and again on offer night and losing out on homes. For some buyers, a bully offer is a way to cut the line and hopefully not be outbid.

Bid twice. If the seller wants to wait till offer night before accepting offers, a buyer can resubmit their initial bid at that time and hope it’s strong enough to beat other buyers. A traditional buyer will usually bid once on offer night, with the possibility of negotiating their offer against others as they come in. You will also be able to change previous stipulations of your initial bully offer to make it more appealing.

Seller Cons of a bully offer

Missing out on higher offers. By accepting a bully offer, you could be missing out on the competition of multiple other bidders on offer night. Multiple offers or an enthusiastic buyer could drive the price of your home up past the initial bully offer, making it more profitable to wait.

Lose an interested buyer by waiting for offer night. Similarly, while waiting for offer night could work in your favour – waiting could also cost you a buyer who isn’t planning on sticking around till then. There is no guarantee that the buyer who submitted their bully offer will return on the scheduled offer night, and if there are no other buyers or slow competition you may have lost out on a very lucrative deal.

Seller Pros of a bully offer

Quick sale and on your terms. Buyers who submit bully offers are usually willing to meet sellers’ conditions without much fuss. That typically means buyers are willing to agree to a quick close and lets you skip the hassle of open houses and offer night, allowing you to quickly start finding your next home.

‘Clean’ offer. A ‘clean offer’, or firm offer, means that buyers are coming without any hangups. Often, no inspection, no repairs, no backdoor. As a seller, that means they’ll take your home as-is, allowing you to rest assured that they won’t back out and won’t make you put any more money into repairs or upgrades.

If you are thinking about making or accepting a bully offer on a property, be sure to consult with your realtor first. They will be able to help you determine if it is a good idea in the current market conditions and can also give you guidance on how much to offer. Bully offers can be a great way to stand out in a competitive market as a buyer, so don't be afraid to use them to your advantage!