416-925-9191 Tiffany Sly, Sales Representative, Chestnut Park Real Estate Limited, Brokerage

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Does new offer wording encourage real estate ‘bully offers’?

Nov
5
2014
Does new offer wording encourage real estate ‘bully offers’?

I think for the most part we’re all pretty familiar with the phrase ‘bully offer’ as it seems to be a common procedure since we continue to be challenged with the lack of inventory in key markets…

If you are not familiar with this phrase, here is your crash course – When agents say they will not review any offers before a specific ‘offer date’ and if an offer is submitted before that date it is considered a ‘bully offer’ or ‘pre-emptive offer’. This means the buyer is very serious about the house and chooses to submit [what should be] a very acceptable condition free offer before an offer date in hopes the seller will accept it and not wait until the ‘offer date’ when there could be the potential for more than one offer to come in. In a hot market, the rule of thumb is any ‘pre-emptive offer’ should be 10% over the asking price or more and it should contain NO conditions. It should, essentially, be very attractive and entice the seller to accept before the scheduled date.

When there is an ‘offer date’ set, agents are required to state on the listing the ‘offer date’ and time when they will be reviewing offers for agents and buyers to see and plan for. Recently, our rules have changed and agents must now also state whether the seller WOULD consider offers before this date… The wording we are required to include is “The seller reserves the right to consider pre-emptive offers.”

With the recent media coverage on this change to our rules for holding offer dates, especially in this Globe & Mail article written by Carolyn Ireland published last week, the issue seems to have been completely misunderstood. It has left people asking “Does the new offer wording encourage real estate ‘bully’ bids?”

The answer is “NO, it DOES NOT.” Nothing has changed except for the fact that we, as agents, must now disclose whether sellers WOULD consider ‘pre-emptive’ or ‘bully’ offers. The entire procedure has remained the same… so there’s no need to PANIC 🙂 It is not to pressure buyers any more than they already are…

Prior to this change, it was understood that sellers always had the right to review any offers received before their ‘offer date’, it just wasn’t spelled out on the listing. Some sellers have vowed to not look at a ‘bully offer’ but they had become tempted if one arrives. Listing agents have always been obliged to notify the seller but it is always the seller’s decision if they will consider it or not AND the ‘pre-emptive offer’ must be acceptable for them to consider it in the first place. Stating that they reserve the right to consider ‘pre-emptive offers’ doesn’t mean they shall… That has always been the case…

If you have any questions about this, please feel free to contact me. I’m always here to help!

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