The Toronto housing market is as competitive as ever. Even though some buyers are finding themselves pushed out by rising prices, there are simply not enough houses for sale to meet the demand.
With Spring approaching and a looming increase to interest rates, we may start to see a shift where things become less aggressive. However, the seller’s market remains strong and will likely continue into next year at least.
For sellers, the short supply of houses can often trigger a lot of bully offers. What does this mean, and how do you handle it when it happens?
We’ve put together a comprehensive guide to help sellers determine the best course of action.
A Bully Offer – Defined
A bully offer (also known as a preemptive offer) happens when an eager buyer tries to jump the line and submits a bid before your official presentation date.
Bully offers usually have three characteristics to try to persuade the seller to shortcut the process:
- They offer well above the asking price.
- There will be no conditions attached.
- There is a very short time limit for the seller to decide.
Bully offers are very aggressive. The buyer isn’t just trying to beat the competition before they even have a chance; they’re actively trying to “bully” the seller into accepting.
After a series of interest rate hikes, the Toronto real estate market is changing. Here’s what you need to know:
What Are Your Options?
When a bully offer comes in, you have the same options as a regular offer. The only difference is you have to move quickly because of the short deadline the buyer gives you to respond.
- You can reject the offer outright.
- You can come back with a counteroffer.
- You can accept the offer.
Want to know more about what to expect when selling your home? Here are some other posts you may find helpful:
Should You Ever Accept a Bully Offer?
Receiving a bully offer often causes mixed emotions. On one hand, it’s reassuring to know that your house is desirable. If you accept, you have the peace of mind of knowing your home is sold. Having the process over with can feel like a huge relief. In addition, you’ll receive a reasonable price for your house.
However, the question might haunt you going forward. Could you have received more if you waited until offer night? If you’ve sold a house in the last two years, chances are you could have. There are so few listings that bidding wars have become an almost daily occurrence.
It Isn’t Always About Price
Accepting a bully offer isn’t necessarily about getting the highest price for your home. Often, it’s a lifestyle choice. If you need to sell quickly, or have health issues and don’t want to get bogged down in the process, then a bully offer makes your sale quick and easy.
One of the reasons people accept a bully offer is to avoid the time commitment and hassle of selling a home. However, at Olea Real Estate Group, we handle every part of the sale for you.
Other Factors to Consider
The market changes. We are in a very strong seller’s market right now, but that doesn’t mean the market couldn’t change quickly. New government regulations could cool interest from investors, especially foreign buyers. Currently, Ontario is working on legislation to raise the foreign buyer tax from 15% to 20%.
How many people have viewed your home? If you’ve been booked solid with home showings, chances are there is a lot of interest, and you’ll likely get a better offer if you wait until your presentation day. If viewings have been few and far between, it could indicate a cooling market and a lack of interest. In this case, a bully offer might be your best chance to get well over your asking price.
Is the offer legitimate? It’s one thing for someone to present a bully offer at a high price with no conditions. However, if the buyer is jumping the gun before confirming they can get financing, the deal will likely fall through anyway. Instead of the relief of a fast sale, you get the headache of starting all over again.
Is the price right – or almost right? If an eager buyer offers you a very aggressive price right off the bat, it might make sense to accept it or even make a counteroffer. However, make sure it’s a very satisfactory offer. Otherwise, you won’t be able to sleep wondering if you’ve shortchanged yourself.
Discuss Your Options in Advance
Receiving a bully offer can cause a lot of stress if you’re not prepared for it. The short deadline is set deliberately to put you under pressure. Talk with an experienced real estate agent beforehand about what to do if a buyer gets aggressive. Decide how much you would consider accepting and under what circumstances. When you know your boundaries ahead of time, you won’t get caught off guard and will be able to make the right choice for your situation.
We take a “People First” approach to selling. We do everything in our power to protect your interests and make you feel comfortable throughout the entire process. If you want to know more, you can book a free, no-obligation meeting with us.
