You’ve likely heard the term “Bully Offer” numerous times but what is a bully offer? How does it work? And who does it benefit?

In a seller's market, which we are experiencing now, there are more buyers than there are homes listed for sale. This means sellers have a strong negotiating position with often more than one buyer showing interest or offering on their home.

Bully offers, also referred to as pre-emptive offers, occur when a Buyer tries to short-circuit the process set out by the Seller and re-take control.

What is a bully offer?

A bully offer is an offer from a buyer to the seller to purchase a home and the offer is submitted before the date that the sellers have indicated they will look at any offers.

Many home sellers make the decision when they list their home to “hold offers” and wait for a certain date and time to review them.

For example, a seller lists their home for sale on Thursday but has agreed not to review any offers until Monday, giving buyers time to view the home and prepare their offers prior to submission. However on Friday night, after only 1 day on the market, the real estate agent calls to tell the sellers that they have a bully offer and it’s only good until Friday at midnight. This is the meaning of a bully offer in real estate.

What are the benefits of a bully offer?

A bully offer is typically well above the asking price and unconditional.

A buyer submitting a bully offer knows they need to make the offer as irresistible as possible to grab the buyer's attention.

Sellers are not obligated to accept bully offers, however, your agent is obligated to present all offers to you. That said, bully offers are often very attractive and many sellers will accept them for the simple facts of the high purchase price offered and the ease of closing.

Is a bully offer bad?

While it may seem unfair or unethical, there are no written laws stating that they are illegal.

They do, however, push many buyers out of the market and increase the price of homes in the market. Accepting a bully offer is completely up to the seller, there’s no right or wrong answer.

When to avoid a bully offer?

A bully offer should be avoided when:

• The offer is not well above asking price.

  
  

• The offer has conditions on it, meaning it will be sold conditionally.

  
  

• The property has had a ton of interest, showings, and excellent feedback, meaning you can likely expect a large number of offers on offer day.

  
  

• Your agent doesn’t have enough time to notify all other interested buyers that an offer has been submitted.

Bully offers can be fantastic for buyers, they are usually ridiculously high, unconditional, and work around the seller's desired closing dates.

However, as a competing buyer, they may seem unethical and can drive the prices of homes up. 

When thinking of marketing your home for sale, the thought of a few updates may cross your mind.

Most updates will be greatly appreciated by buyers and will increase the value of your home.

But not all of them…there are a few updates, that may not appeal to the masses. And when selling your home, you want it to be attractive to as many buyers as possible.

Exterior

Unless all the houses in your area are painted bright, vibrant colours, this is definitely something that should be avoided. A bright red or aqua blue home can look out of place and may leave buyers thinking about repainting it.

With how quickly homes are selling these days, buyers are looking for something they can settle into right away without the added costs and hassle of repainting.

Interior Paint

Brown, drab dining rooms and vibrant red kitchens are also top of the list for colours to avoid on the interior.

If you stick with neutral or warm colours, then you can save the bright, fun colours for drapes, backsplashes, and such.

Inconveniently Placed Appliances

The thought of ‘hiding’ a microwave in a drawer may seem like a great idea, however, most buyers find these a bit inconvenient and far too low for their liking. Stick with the traditional microwave placement above the range or in a space above the countertops.

Backyard

Expanding living space into the backyard is something that many buyers are looking for today. Having extra space to cook, relax, practice hobbies, etc. is ideal for everyone, particularly with so many of us working from home now.

Yes, many buyers will have children or will plan to have children, however, having a backyard that looks more like theme-park than a family space may be a turn off to many buyers.

Try to keep the children’s play area in one section of the yard rather than the entire yard. This will give buyers the ability to envision themselves living here and making memories with their families.

These suggestions may not apply to all homes or all buyers, however, they will appeal to the majority of buyers and that will ensure your home sells as quickly as possible.

When beginning the renovation process on your home, there are typically two goals that cross your mind; the first is improving your home’s livability and usability, and the second is how this renovation will improve the value of your home. 

With the kitchen being the most focal point in the home almost any updates in this room will provide you the best return on your dollars invested. 

The key to a kitchen renovation is to keep it somewhat simple. Remember, you don’t need to spend $60,000+ to renovate your kitchen, an update with new appliances can be much more affordable if done carefully. 

Replacing appliances can be pricey, however, it can also be very profitable. You do not need the most expensive appliances on the market; modern, stylish, and energy-friendly appliances can be purchased at fair prices and will improve the look of the room drastically. 

Replacing the flooring can also prove an excellent return on your dollar. Be sure to choose flooring that is long-lasting and easy to clean. Hardwood floors are definitely something that should be avoided in the kitchen area as it can easily stain and deform if it gets wet for long periods of time. 

Updated hardware is an easy and extremely affordable fix, these items can be purchased at your local hardware store and often installed by yourself. Be sure to avoid flashy or coloured hardware, these are short-term trends and will look dated within just a year or so. 

If your home has older oak or wood coloured cabinets, you can simply sand these down and paint them in a bright neutral colour, white is often the preferred choice in kitchens. By doing this task yourself or even hiring someone to take care of this will save you thousands in replacing them. 

When looking at your walls, you may want to choose a fun, bright, and lively colour, however, if you’re planning to sell your home in the near future, you’ll want to choose a neutral shade that will appeal to the masses. Remember, you can always choose more colour, design, and style with your backsplash. 

Last but definitely not least, is your countertops. Yes, we all dream of the perfect marble countertops, but these are extremely expensive. Giving granite countertops consideration, which is durable, looks fantastic, and comes in many styles, will save you thousands of dollars and won’t decrease the value of your kitchen in comparison to marble countertops. 

When planning your kitchen reno there is so much to consider; colours, styles, livability, usability, and much more, it’s no wonder that you may have some questions. Please reach out to us at JP Real Estate as we would be more than happy to take a look at your kitchen and give you some ideas of what may work best for your home. 

Buying a home can be exciting, scary, intimidating, and liberating all at once. It brings about many emotions that are unexpected and also reassuring.

You may feel a sense of comfort knowing that you’re ready to take this leap into homeownership and settle into a place for years to come. Or you may feel nervous, wondering if you can financially manage the responsibilities that come with buying a home.

If you can truly answer “Yes” to each of these questions, then you are ready to jump into homeownership and all the ups and downs that go along with it:

Do you have a stable income?

Having a stable income is extremely important when purchasing a home. A lender will shy away from giving you a loan if you are known to change jobs frequently. They want to see stability and commitment from you with your income and savings. 

Do you want to stay in the area long-term?

If you’re planning to move to a new area or city in the next year or two, it might be best to rent a home. Taking into consideration the closing costs (realtor fees, lawyer, etc.) that you will be spending to purchase and then sell home the home in a couple of years. What might seem like a good idea now, may not look so profitable when you add up the additional costs.

Are you comfortable managing your debt?

Having no credit can be nearly as negative as have a poor credit score in the eyes of a lender. They have no evidence to review of you paying your debts regularly in a timely fashion. If you don’t have any credit at this time, we suggest applying for some credit with low limits or a secured loan. This will assist your mortgage application process in the future.

If you have poor credit, you should start paying down debt as soon as possible, and always on time! 

Do you have an emergency fund?

After 2020, we all more than aware to expect the unexpected. Having an emergency fund can help you if you find yourself in a situation of a job loss or health emergency.

You’ll also need to have savings for home repairs, as a homeowner you can no longer call your landlord if the fridge stops working or there’s a water leak in your home. These repairs are your financial responsibility and unfortunately, they are rarely cheap.

Have you saved a Down Payment?

A down payment can be extremely hard to save for. With home and living prices increasing, it’s becoming harder for people to save funds, especially tens of thousands of dollars.

If your family is planning on helping you with the down payment, you’ll need to ask them to transfer the funds to you well in advance as your lender will need to see these funds in your account for a period of time before approving your loan. 

Do you know how much you can afford to spend on a home?

Having an idea of the type of home you want is fantastic, but can you afford it? You should work with your lender to obtain pre-approval financing which will let you know the maximum amount of money they will give you. From this amount, you’ll then want to calculate monthly mortgage amounts and decide on an amount that you’re comfortable with. Just because a lender has offered you a certain amount certainly doesn’t mean you need to spend that much.

Having a good handle of your personal finances, expectations, and savings will serve you when purchasing a home. 

Are you willing to make sacrifices to become a homeowner?

As with any large purchase, homeownership comes with sacrifices too.

Are you willing to give up eating dinner out every weekend? Can you give up that beach vacation every year or your annual trip to Vegas?

Buying a home is a large responsibility and while you don’t need to find yourself mortgage poor, you do need to ensure that you can meet your financial commitments and save for emergencies.

If you were able to answer ‘yes’ to all these questions, you are very likely ready to take the leap into homeownership.

However, if you weren’t able to answer yes to all of them, that is OK too. There are ways to work around certain things, ways to improve credit, and much more.

JP Real Estate is here to help every step of the way. We offer advice, assistance, and can help you prepare yourself for buying your first home.