“Bully Offers” is when a buyer decides they don’t want to wait for a specific date established by the seller for the receipt of offers, and instructs their agent to submit an offer prior to that date.
It is a fairly common practice in this market, for a listing agent to establish a specific date for the receipt of any offer(s). This date is known as the Offer Presentation Date and is a marketing strategy – a desire from the seller that this is how they would like things to happen. Typically, this marketing strategy is accompanied by an asking price for the property that is below market value in order to establish a bidding war.
The best-case scenario – for the seller, at least – is that prospective buyers will line up at the door hoping to bid enough over the asking price so their offer is accepted.
So, the listing agent establishes a pricing strategy that will hopefully, benefit their client – the seller. But there is nothing in the rules that says that any other agent is bound by the strategy. And therein lies the conflict. Of course a seller wants to get the maximum amount of money for their home. Their agent’s job is to maximize the possibility of that happening and this strategy can often help to achieve that. But, like any strategy, it can fail.
And what about the buyer’s interests? Everyone seems to forget that there are two parties involved in any transaction. And normally, two agents. One representing the seller, and one representing the buyer.
If you are an agent acting for a buyer, you have a legal obligation to act in your client’s best interest, regardless of what the seller’s pricing strategy might be. And if submitting bully offers is what the buyer wishes to do, then that is what the agent must do.
A seller of course, has the choice not to deal with an early offer. There is a risk involved in dealing with one and equally, a risk involved in not dealing with one.
Welcome to the world of real estate and bully offers!
What boggles my mind is that after all the years and hard work it took to get buyer representation in Ontario, we still act as though the seller is the only party to a transaction. If we don’t start actually representing the interests of our buyer clients, what value do we bring to them?