What Is A Preemptive Bully Offer?

What Is A Preemptive Bully Offer?

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated November 29, 2021

Over the past five or so years, the Canadian real estate market has experienced a significant boom, leading to a major demand for affordable housing. Unfortunately, cheaper homes are becoming harder and harder to find these days, especially in and around our country’s most popular cities, where prices always seem to be climbing. 

During a real estate boom, sellers with desirable properties will often price their homes low and avoid accepting bids until a set date. At this time, a type of auction will take place where potential buyers will have to offer higher and higher prices. This tactic starts a bidding war between potential buyers and leads to a higher profit for the sellers. That’s why some homebuyers will make the seller a “preemptive bully offer” before the auction happens. 

What Is A Bully Offer?

As mentioned, a homeowner will sometimes refuse to take offers on their property when the housing market experiences a surge. This gives the home more time to generate interest through advertisements and visits from would-be buyers. In turn, the increased desirability of the property can lead to a bidding war and higher selling prices.

Essentially, a preemptive bully offer is when a buyer makes a large bid on the property soon after it’s been put on the market. That bid is usually a limited-time offer designed to get the homeowner’s attention so that they’ll sell their property quickly. The seller can then accept the offer and begin negotiations or refuse it and wait for a bidding war among other prospective buyers.

Main Features Of A Bully Offer

There are several things that set preemptive bully offers apart from other real estate transactions, including but not limited to:

  • Speed – Generally, most homebuyers will send their bully offer to the seller within the first few hours or days of the property being listed. This helps them get ahead of as many other potential buyers as possible and lets the seller know they’re serious. 
  • Above Asking Price – The majority of homebuyers will also make their bully offers well over the seller’s initial price tag to hook them. If the offer is enticing enough, the seller might forgo the future auction process altogether.   
  • Quick Response Required – Another common pressure tactic that gets added to a preemptive bully offer is a time constraint of several hours or days before it expires. This ensures that other buyers won’t have as much time to make offers.

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How Does A Bully Offer Work?

Here’s a basic example so that you know how the bully offer process normally works: 

  1. You find a desirable home selling for $400,000, so you get your real estate agent to arrange a visit.
  1. The seller is set to start accepting offers Monday at 9:00 am. 
  1. To get ahead of the competition, you make the seller a bully offer of $450,000 within a couple of hours of visiting the house and a couple of days before they start accepting offers.
  1. The realtor also tells the seller that your bully offer will expire that specific day at midnight, so they’ll only have a few hours to think it over.
  1. Since the seller isn’t guaranteed to get a better offer when they finally auction off the property, they might just accept it and take the extra cash.

Before you make a preemptive bully offer on any piece of real estate in Canada, it’s smart to set up an inspection of the home. Just keep in mind that inspections aren’t always possible, depending on the circumstances of the sale.

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Pros And Cons Of A Bully Offer

Although bully offers are relatively simple to understand, they come with some notable benefits and drawbacks that you should be aware of before you make or accept one:

Pros

  • Zero Conditions or Legal Requirements – There aren’t any laws that say you have to accept a preemptive bully offer until you start signing agreements.
  • You May Get a Higher Price – One of the best things about a bully offer is that the buyer may offer you a better price for your home than you initially asked. 
  • Avoiding Competition – If you’re the one making the bully offer, you can get miles ahead of other buyers by giving the seller an enticing bid before they can.

Cons

  • Risk of Not Knowing – If you panic and accept a bully offer, you’ll never know if your home would’ve gone for a better price if it had stayed on the market longer. 
  • Risk of Spending Too Much – Making a hasty bully offer can cause you to pay far too much for a home that’s not worth it, especially if no inspection is done.
  • Serious Issues With The House – Since you need to submit a bully offer immediately, you likely will not have the chance to have the house inspected. This means you could end up buying a house with serious issues.

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What To Do If You Get A Bully Offer

Remember, bully offers are totally optional. So, once you receive a preemptive bully offer on your home, there are a number of ways you can deal with it, such as:

Negotiate With The Buyer

If the person who made the bully offer seems very interested in your home, you and your realtor may be able to discuss better conditions and prices with them (this is called a counter-offer).

Accept The Offer

If you’re content with the buyer’s offer or you think you won’t get a higher price from anybody else, all you have to do is get your realtor to confirm the arrangement, then go through the normal home selling process.

Turn Down The Offer

As tempting as bully offers can be, you could also try your luck and leave the home listed until a bidding war occurs. An experienced realtor can give you a better idea of how your home will perform on the market.

When To Accept A Bully Offer

Strictly speaking, there’s no clear right or wrong answer when it comes to accepting or denying a preemptive bully offer. It all depends on the circumstances of the real estate deal that’s happening, as well as what price you’re looking to get for your home. 

Then again, since there are occasions when the process can work in your favour, here are some key things to consider before you accept a bully offer in Canada: 

  • The Price – With bully offers, the biggest factor for most sellers is, of course, how much money they can get for their property. If you receive an appealing offer, this is where an experienced realtor and a bit of negotiation can be quite useful.
  • The Risk – You may accept a bully offer, only to find out that your home would’ve gone for more money if you’d left it on the market. However, an interested bidder may offer you tens of thousands of dollars more than you were first expecting. 
  • Interest – If you open your home for viewings and there don’t seem to be many interested buyers coming around, then accepting a bully offer may actually be a good choice, as long as it’s a price that makes you feel comfortable with the sale. 
  • Timing – There are many other scenarios where it makes sense to take a quick bully offer. For instance, if the real estate market isn’t booming in your area or if your property isn’t particularly valuable because it’s in a less desirable location.

When To Decline A Bully Offer

On the other hand, all those same factors could be the exact reasons why you should turn down a bully offer:

  • Lower Price – If your realtor knows their stuff and thinks your home has a high market value, they may suggest that you turn down a bully offer if they think you will get more in a bidding war.
  • High Risk – Once again, if your home is fantastic and in a desirable location, it could command far more money by going through a standard bidding period than it ever would from a bully offer. Don’t be too hasty if there’s no reason to be.
  • Good Interest – One of the only ways to know if your home truly is in-demand is by having prospective buyers visit and inquire about it. So, if your home gets lots of interest during the visitation period, chances are it’ll do just fine with a bidding war.
  • Bad Timing – If your neighbourhood is booming and your home is valuable, you may want to give it a few extra days to gain more interest and bids, unless a bully offer is really high or a real estate agent that you trust says otherwise.

Should You Make A Bully Offer When Buying A Home? 

As you can see, the right bully offer can be beneficial for everyone involved and if you’re a prospective buyer, it could score you the home of your dreams for a great price. Not to mention, you won’t have the pressure of a possible bidding war looming over you. 

That said, if you’re thinking about making a preemptive bully offer on a home, it could pay off to go into the deal prepared. After all, while most sellers prefer to accept a bully offer with no conditions, you also need to be aware of these kinds of risks.

Unfavourable Mortgages

The mortgage application process involves a ton of time and paperwork, as well as a serious review of your finances, credit and employment history. Don’t make a bully offer unless you’re 100% certain that you’ll get approved for a mortgage that meets your needs and fits your budget. Also, keep in mind that a mortgage preapproval is not a guarantee of what you’ll actually get approved for.

Negative Inspection

A home might look fantastic in the pictures and during a visit but you never know what could happen during the inspection. So, if you make a bully offer without putting in a clause that lets you walk away from the offer, you could be stuck with an expensive fix or get denied for a mortgage altogether.

Preemptive Bully Offer FAQs

Are bully offers regulated?

Bully offers are regulated by your provincial or territorial government and slightly different rules may apply in every area. Nonetheless, many hopeful buyers and real estate entities are against them because they’re considered unfair to anyone who, for whatever reason, can’t make a huge bid as soon as a property goes on the market.  

Should I make an unconditional offer on a newly built house?

Although most sellers prefer bully offers without conditions, this can be very risky if you’re the buyer, as you could end up with a home that’s not worth the extra money you agreed to pay. Even a newly built home can have problems, particularly in areas that are newly developed. Adding, at the very least, an inspection condition is always a good idea.

What is a “clean” offer?

When you find a worthwhile home, some realtors will advise you to make a “clean” offer on it, meaning a preemptive bully offer with zero conditions. Not only does this allow both parties to back away from the deal if necessary, but it might also be a good way to hook the seller’s attention and score a better price than you would’ve by entering a bidding war.  

Thinking About Making Or Accepting A Bully Offer?

Make sure to do research and get advice from a professional realtor before you officially commit to it. Remember, a bully offer can be both advantageous and risky for everyone involved, so you’re most likely doing yourself a big favour by going in prepared. Take your time and don’t accept any bully offer that you’re not totally comfortable with.


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Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and traveling the world in search of the coolest sights our planet has to offer. Bryan uses the BMO Cash Back Mastercard to earn cash back on everything from boring bill payments to exciting excursions. He is also a strong saver, holding both a TFSA and an RRSP account in order to prepare for his future while taking full advantage of tax benefits.

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