#VerityAnswers – What is a Bully Offer?
If you watched our video providing a general overview of the multiple offer/bidding war process, you might be following up on what exactly a Bully Offer is.
1. When are bully offers most prevalent?
Bully Offers are most prevalent in Seller’s markets. I would argue that they are most prevalent when inventory levels are extremely low and it is very, very much a Seller’s market.
2. Why would a buyer submit a bully offer?
When Buyers have lost out on one, two or three multiple offers (or more) and prices are jumping rapidly, buyers begin to fear the prospect of being priced out of the market. Or, they just absolutely love a home and really, really want it and want to try and block out other buyers from having the time or opportunity to offer on that home that they love. In these types of cases, buyers may opt to submit a bully offer.
3. How does a buyer submit a bully offer?
The Seller lists a home for sale and sets a bidding date for Buyers. A Buyer ‘bullies’ their way in front of other Buyers and submits an offer to the Seller BEFORE the offer presentation date that has been set. By submitting an offer immediately for the seller to review and not giving the seller much time to review the offer, the Buyer is hoping to limit or reduce the number of people that can view the home and submit an offer of their own, effectively trying to reduce the competition they are competing against.
4. Why would a Seller accept a bully offer?
A Bully offer has to be so sweet and so good that the Seller is afraid they won’t achieve that same sale price and terms on the offer date that they’ve set. You can imagine that a Buyer is not getting a ‘deal’ of any sort and likely paying a price and/or giving terms that exceed the Sellers wildest dreams and possibly, appraised value.
There are a number of pros and cons that really need to be considered BEFORE you submit a Bully offer and you should discuss these with your realtor to understand all of the implications of submitting this type of offer. We would strongly encourage you to work with a knowledgeable realtor who can advise and direct you accordingly if you’re considering submitting a bully offer.