Ask a Wahi REALTOR®: How To Tell If a Seller Is Waiting for a Bully Offer

Bullying isn’t limited to the playground. In real estate, some buyers attempt to “bully” others with an aggressive, pre-emptive offer. Here’s how to tell if a seller is vying for one.

By Josh Sherman | 2 minute read

Nobody likes to be bullied. But even in the tightly regulated and formal world of real estate transactions, it happens. Now, what we’re talking about is nothing like playground teasing or a threat to meet at the baseball diamond after school — though it can still be unpleasant. We’re referring to the dreaded bully offer.

A bully offer, or preemptive offer, is a strategy wherein a homebuyer puts in an early offer — and typically at an amount much higher than the listed price. It’ll likely also only be valid for a short time so that the seller needs to decide very quickly. The aggressive strategy doesn’t just seek to beat out the competition — the hope is other homebuyers won’t even have the chance to put up a fight with another offer.

So how do you know when to expect a bully offer? There are a few signs to look out for that suggest a seller is holding out for a bully offer. 

1. It’s a Seller’s Market 

• Bully offers are most likely to materialize in a seller’s market. Under these circumstances, sellers generally have higher expectations for sale prices. A seller’s market occurs when the demand for properties exceeds what’s available for sale. There are multiple ways to measure this imbalance. 

How to Tell if It’s a Buyer’s or Seller’s Market: 

• One common measure is the sales-to-new-listings ratio, which represents how many homes are sold compared to new listings appearing on the market. A ratio of 60% or more — which means six homes are selling for every 10 that are listed — is widely considered to be reflective of seller’s market conditions in most environments, although this varies somewhat from place to place.

   

• For homebuyers in the Greater Toronto Area, Wahi’s Market Pulse tool is a hyper-local barometer of homebuying demand and bidding competition. At the neighbourhood level, it shows where homes are most likely to sell above and below the list price. Even if the broader market favours buyers, there could still be pockets of demand that function like mini seller’s markets within a larger geography. 
  

2. An Offer Night Has Been Set  

When a seller sets a specific offer night — rather than having an open-ended listing and accepting offers as they come in — the chances of a bully offer rise. On an offer night, which is often set for a date within a week  of the initial listing, the seller reviews all of the bids at once. However, there’s nothing stopping an ambitious homebuyer from putting in a high-priced bully offer ahead of the deadline (unless the seller has expressly said they will not consider offers ahead of that date).

• Why do some buyers place bully offers? With a pre-emptive bully offer, a buyer is hoping to avoid the competition and negotiations that can ensue with an offer night. The idea is that the offer is so compelling that the seller is willing to forego whatever other offers may be put on the table. 

   

• Why do some sellers set offer nights? Sellers set offer nights, or presentation dates, as a strategy to solicit as many offers in as short a period of time as possible, with the goal of triggering bidding competition or higher offers. This is typically only effective if market conditions favour sellers and the home is priced below market value.

3. The Home Is Listed Far Below Its True Market Value.

“The main indication is if the home is priced well below market value,” says Wahi Broker of Record Anne Alkok explains. “Typically, a date has been set to review offers, but the buyer’s agent would have to check with the listing agent to see if the seller would consider a bully offer prior to that date,” she continues.

How to Tell if the Home Is Priced Below Market Value: 

• Check the comparables. Either by using the Wahi app or website, which present previously sold data, or by asking your Realtor, check to see how much comparable homes in the neighbourhood recently sold for. If there is a wide margin between the sold prices and the list price, the home is probably priced below market value.

• Wahi’s Home Value Estimator. For Ontario homebuyers, each listing on Wahi includes an estimated value. Wahi’s Home Value Estimator generates a free estimate of a home’s estimated market value — with up to 90% accuracy. Home owners can also use the tool for an estimate of their own home’s value. The estimate is based on a variety of factors, such as taxes, lot and home size, bedroom count, and more.