Should I Accept a Bully Offer?

The pros and cons of a bully offer and how to deal with one.

By Emily Southey | 12 minute read

Bully offer is a term that often comes up in the world of real estate. Yet, many sellers fail to understand what a bully offer is let alone the consequences of accepting one. Whether you’ve already received a bully offer or simply want to be prepared for one, keep reading to learn what they are, their advantages and disadvantages, and some expert tips on dealing with them.

–

Bully Offers Explained

To explain a bully offer, we must first explain offer review dates. Some sellers, especially in a hot seller’s market, will opt to review all offers on a specific date, known as an offer review date. This is a date set by the seller, in which they review all offers that have been made since the listing first went live. This is in contrast to the more traditional method of reviewing offers as they come in. As a seller, the offer review date, or the earliest chosen date when you will look at your offers, allows you to clearly lay out all of your bids and compare them at the same time. While the purpose of an offer review date is to alleviate stress and ensure the seller makes a clear-headed decision, there is one type of offer that can disrupt this process: the bully offer.

 –

When sellers have offer review dates, it opens up the possibility for a bully offer. A bully offer, sometimes referred to as a pre-emptive offer, is an offer made on a property pre-emptively (that is, in advance of the seller’s offer review date). Bully offers are often made by buyers in seller’s markets when there is more demand than supply. While the seller is under no obligation to consider your bully offer, if the offer is enticing enough, it can be an effective homebuying strategy. Generally speaking, the purpose of a bully offer is to give the buyer a better chance of winning the home by submitting an aggressive offer (one that is usually well over asking) before the offer review date — allowing them to avoid a competition or bidding war. Some of the typical characteristics of bully offers include: 

 –

• Bully offers are submitted shortly after a home is put on the market to avoid competition (sometimes bully offers will be made within a few hours of the listing going live).
• Bully offers are usually significantly above the asking price.
• Bully offers usually feature a short irrevocable period (this means that a seller may only have a couple of hours to respond to the offer), the purpose of which is to pressure the seller into accepting the offer. Even if the bully offer has an expiration date beyond a few hours, it’s usually always before the offer review date in an effort to manipulate the seller into accepting the buyer’s offer before they ever look at the others.

–

How much should a bully offer be?

There is no set rule for how much a bully offer should be. However, generally speaking, if you’re going to persuade the seller to accept yours without reviewing any other offers, it has to be enticing. This usually means well over asking. Some REALTORS® advise their clients not to consider a bully offer unless it’s a minimum of $50,000 over asking, though this number might be even higher depending on the listing price of the home and the condition of the real estate market. 

The Advantages and Disadvantages of Accepting a Bully Offer

Bully offers come with a mix of advantages and disadvantages for sellers. Most sellers do not like bully offers as they go against the whole purpose of an offer review date. That said, there are times when they can work to the seller’s advantage. First, if a buyer puts in the effort to make a bully offer, it likely means that they’re serious and as such, they’re probably offering a pretty hefty sum for your home. While there are exceptions to this rule, most bully offers are significantly higher than the home’s asking price as a means of tempting the seller to accept it. If the bully offer is particularly lucrative, the seller might decide to accept it simply because they don’t think they will receive another offer that beats it. Another benefit of accepting a bully offer is that it means the deal will be done quicker than if the seller had waited for the offer review date. 

 –

On the other hand, accepting a bully offer means that the seller will never get to review the other offers, which means they won’t know how much other buyers bid on their home. For this reason, some sellers view bully offers as a lose-lose. Even if they are pleased with the offer price from the bully offer, they may always be left wondering whether they missed out on a potentially higher bid from another bidder. In addition, the short irrevocable periods can be extremely stressful. Selling a home is stressful enough as it is, and some sellers do not want the added anxiety that comes from a bully offer.

– 

At the end of the day, bully offers represent one more option for the seller, which is usually a good thing. Plus, sellers are not required to accept or even entertain a bully offer. If you know that reviewing all bids on the offer review date will give you the peace of mind you need, you can still opt to do that, even if someone submits a pre-emptive offer.

–

Tips for Bully Offers

Prepare for the reality of receiving a bully offer on your home by following the tips below.

–

1. Consider the factors

There are many factors to consider when deciding whether to accept a bully offer. For example, the interest your home has garnered since being listed (which can partially be calculated by the number of showings that have been scheduled), can give you an idea of how many offers you’re likely to receive. If it’s a seller’s market and you suspect there will be lots of offers, then a bidding war might ensue, which could lead to a higher price than the bully offer. Oppositely, if your REALTOR® notifies you that a below-average number of showings has been booked, it might be a sign to carefully consider the bully offer. 

 –

Of course, the price of the bully offer should also be considered. To determine if the price is right for you, consider how much above asking it is and then compare that to your home sale goals (before you listed your home, you should have discussed your minimum sale price and ideal sale price for your home). Another factor that must be considered is risk. Bully offers are inherently risky. Since they prevent the seller from seeing any other offers, accepting a bully offer means that you could be selling your home for less than what you could have gotten on the offer review date. On the flip side, rejecting a bully offer can be equally risky, as the bully offer may be far higher than anything that comes in on the offer date. There is also the risk that the bully buyer does not resubmit their offer before the offer review date.

2. Seek advice from a professional

Our next tip when it comes to bully offers is to seek advice from a real estate professional. Realtors are experts in the industry and can give you all kinds of unbiased advice on how to handle a bully offer. Even if you aren’t working with a REALTOR® to sell your home, we recommend consulting with one if you receive a bully offer and aren’t sure whether to accept it. A REALTOR® will not only be able to lay out the short- and long-term consequences of accepting a bully offer but they can also leverage their resources and expertise to predict the likelihood of you receiving a comparable or higher bid on the offer date. 

–

3. Don’t hesitate to negotiate

As with all kinds of offers, bully offers can be negotiated. Just because they are aggressive and have very short irrevocable periods doesn’t mean that negotiating is out of the question. If there are components of the bully offer you aren’t happy with or you want to see if you can get them to increase the price, work with your REALTOR® to submit a counteroffer. 

–

4. Discuss the possibility of a bully offer with your REALTOR® before your home is listed

Bully offers are a real possibility, especially in a seller’s market. Therefore, sellers need to be aware of and prepare for this reality. To do this, they should discuss the possibility of a bully offer with their REALTOR® before the home is listed. During this discussion, the REALTOR® should explain what a bully offer is, as well as the pros, cons, and consequences of accepting one. If, after learning more about bully offers you decide that you do not want to be tempted by one, you can ask your REALTOR® to sign a document that instructs them not to show you any bully offers. This way, if a buyer does submit a bully offer, you won’t ever know about it and can avoid temptation (and the regret and anxiety that may come with it!). 

–

5. Don’t be greedy

If the idea of a bully offer excites you, take some time to ponder what your magic price would be (that is, the price that would make you abandon all other offers and accept the bully offer). If you receive a bully offer and it meets or exceeds this price, don’t get greedy. Bully offers are usually aggressive and above asking, so if the price is right, accepting it might make sense. Plus, accepting a bully offer may come with other perks, such as a faster closing date and avoiding the hassle of showings and open houses.

–

When to Consider a Bully Offer

A few situations in which a buyer might want to consider a bully offer are as follows: 

–

If the offer is well over asking

If you receive a bully offer, chances are it’s going to be over asking. However, in most cases, the offer must be significantly over asking to persuade the buyer to give up their right to review other offers. While there is no clear-cut rule and it partially depends on the real estate market at the time of the sale, many REALTORS® recommend only entertaining bully offers that are a minimum of $50,000 over the listing price.