In today’s fast-paced real estate market, it’s important to keep yourself up to speed. We are seeing more and more listings generate multiple offers and bidding wars by simply specifying a date in which the seller will review all offers.
It is in this type of environment that we see the emergence of Bully Offers. Understanding terms like “bully offer” is essential, whether you’re looking to buy or sell a home.
So let’s take a look at bully offers – what they are and how they work.
What Is A Bully Offer?
In it’s most simple terms, a bully offer is an offer to purchase submitted ahead of the specified offer presentation date. It normally expires within a limited number of hours and can often be substantially above asking price.
Anyone looking at listings in 2020 will have undoubtedly come across something like “…offers accepted March 28th at 2pm..” or similar. A bully offer is simply an offer submitted before March 28th at 2pm.
We are seeing many more bully offers due to the lack of inventory — buyers are snapping up anything and everything they can get their hands on. Buyers who have lost a bid on a home they loved (especially to a bully offer) will be looking for any and all advantages available. Sellers who want to put a stop to bully offers on their property have an option however, they can sign a Form 244 with their agent.
What Is Form 244?
Form 244 is a signed document that outlines “Special Instructions” to your agent. These instructions may indicate that you do not want him or her to convey any offers before the designated presentation date, usually set for 1-2 weeks after the original listing.
You can tell if a seller has signed a Form 244 with their agent by the presence of some familiar wording in the listing such as “No conveyances before X date”. The wording is crucial when writing up a Form 244. Having the right agent by your side will ensure that everything is explained clearly and in detail, a good agent will ensure you know exactly what you are getting when signing a Form 244.
How Does Form 244 Work?
You as the seller may choose to sign Form 244 when multiple offers are expected. This helps you resist the temptation to accept a bully offer, and instead review all the offers at the same time … and a potentially higher price. Agents are legally obligated to present any offer they receive to you within a strict time frame, unless – you sign a Form 244.
When To Conduct A Bully Offer As A Buyer?
House hunting is challenging in Ottawa’s current market, where buyers face stiff competition. When you find a house you really love and can’t bear to lose (or a home for sale by owner), making a bully offer might be a savvy strategy WITH the guidance of your real estate broker.
Here’s how your real estate agent will help:
- Hot info on new listings. A good agent will tip you off to upcoming Ottawa home listings ASAP. That way, when you spot an interesting listing in a community you like (such as Hintonburg or Alta Vista, you’ll be prepared to view the property – and get your offer in – fast. Your broker can also update you on distress sales.
- Tailoring your offer for success. Your agent can also advise you regarding the type of bully offer most likely to succeed. He or she should have already ensured you’re pre-qualified for financing (and if not, look for an agent who’s more on the ball!). Now you two need to hammer out the exact terms of your offer and the magic dollar figure that could win your dream home.
When To Accept A Bully Offer As A Seller?
As a seller, you’re in a strong position right now. Your best bet, almost always, is to resist the urge to accept a bully offer and wait for the offer date. However, you might consider the offer if:
- You’re totally turned off by the prospect of multiple open houses and the offer process (even though your broker is there to make the process as painless as possible)
- The bully offer is excellent and meets all of your requirements
Never accept a bully offer before carefully reviewing the terms with your broker. An agent understands that the highest offer isn’t always the best; closing dates, financing approvals and inspection/repair reports are part of the equation … potentially a very significant part.
Why Do You Need A Real Estate Agent?
While you can get a good sense of what any home is worth thanks to the internet, it is in the negotiation of the final accepted price where your agent is most valuable. Experienced brokers in the Ottawa market all know each other and will have a good sense of the negotiating strategy of the opposing party.
This is one of the largest purchases of your life – get every advantage you can.
The experienced agents at Paul Rushforth will help make your goal a reality:
- As a buyer, purchase a beautiful home, without losing out to competing buyers.
- As a seller, sign a great deal at a great price.