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Are bully bids the newest dragon in Toronto real estate?

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Real Estate Professional | 29 Sep 2014, 09:02 AM Agree 0
It’s unsurprising that, in Toronto’s hyper-heated market, bidding wars are essentially part of the home-buying process. But what about the newest phenomenon: bully bids?
  • DA | 29 Sep 2014, 11:17 AM Agree 0
    It will be interesting to hear how this situation plays out if one of the disadvantaged buyers complains. The sellers have directed the listing agent (form 244) to NOT present offers until a future date/time, so the arguments will probably be over whether the call from the listing agent to the seller regarding the bully offer constitutes presentation of the offer. The 2nd issue will likely lie around the fact that other potential buyers didn't rush to even see the home (never mind the missed offer opportunity), knowing they had time to do so, and further, whether the listing agent contacted other interested parties who did show the home. Time will tell
  • RT | 29 Sep 2014, 12:24 PM Agree 0
    A bully offer is so juicy that the Seller's can't resist. The Seller doesn't think they'll get that on offer date. This is the only true "bully offer", anything other than that, we'll see you on offer night! A Seller has the right to change their mind with respect to initially wanting to only see offers on offer night!
  • | 29 Sep 2014, 12:30 PM Agree 0
    I think that it comes down to the preparedness of the buyer's. When I start working with a new buyer, I do everything that I can to have them ready to head into the market. Having their pre-approval done, educating them on the dynamics and explaining a variety of situations that could happen in order to get them ready.

    Once they have a good foundation of the facts, then you head out into the real estate market place. Bully Offers are inevitable. They exist, so if you have your buyers as ready as you can, when that presents itself, it won't be a surprise. If they can bid, then they do, there is a lot to be said. So I think it comes down to working with your buyers and having them educated enough so that they trust your experience as an agent and don't start drawing their own conclusions about what they expect to happen.

  • Michael Wood | 29 Sep 2014, 02:02 PM Agree 0
    3 bully offers this week in Pickering and although we appreciated them, they were not compelling enough to bypass the original plan of having an offer date. 70 showings in 7 days as well...there are a ton of Buyers out there.
  • Jay | 29 Sep 2014, 02:44 PM Agree 0
    Michael Wood, can you post the listing please. 70 showings is impressive.
  • | 30 Sep 2014, 07:51 PM Agree 0
    RECO's registrar just published a piece on this very topic. He includes some pertinent information about the how we are to handle bully offers which I'm sure many Realtors aren't aware of.

    http://www.reco.on.ca/UserFiles/Ask Joe/Ask Joe. Sept. 27. 2014.pdf
  • | 01 Oct 2014, 07:11 PM Agree 0
    He doesn't actually say anything apart from there are good and bad things with Bully offers. The undercurrent tone seems to be have a look at them in case they're too good to be true. And I've had experience with offers coming in that seem way over what the property is worth - the offerors are sometimes so scared they won't get the property that they're prepared to overbid, which suits me just fine
  • CHERRY CARNON | 04 Oct 2014, 05:32 AM Agree 0
    THERE IS A PROBLEM WITH BULLY OFFERS...THEY MAKE IT ALMOST IMPOSSIBLE FOR AGENTS TO ADD CONDITIONAL CLAUSES THAT CAN PROTECT THE BUYERS SUCH AS INSPECTIONS AND FINANCING. .. PRE APPROVAL OF BUYERS IS NO PROTECTION IF OVERBIDDING RAISES THE PRICE BEYOND THE APPRAISAL VALUE OF THE PROPERTY. RECENTLY I WAS INFORMED BY THE LISTING OFFICE THAT A BULY OFFER WAS BEING PRESENTED IN HALF AN HOUR SO IF MY CLIET WANTED THE PROPERTY WE MUST HAVE OUR OFFER,WITH A CERTIFIED CHECK READY BEFORE THAT TIME...NO TIME FOR INSPECTION...NO CHANCE OF ANY CONDITIONS AT ALL BEING CONSIDERED... BUYERS ARE FLYING BLIND
    INTO A MAJOR TRANSACTION AND BEING SCARED UNTO OVERBIDDING OR LOSING YET ANOTHER PROPERTY WITH NO TIME FOR DUE DILLIGENCE OR EVEN ANOTHER VIEWING....AS AN HONEST BROKER OF LONG STANDING I DO NOT FEEL COMFORTABLE ABOUT THIS. HAVING A OFFER DATE 3 OR 4 DAYS AFTER LISTING ALLOWS SELLERS TO GET FULL EXPOSURE AND IT IS TIGHT BUT POSSIBLE FOR BUYERS TO GET AN INSPECTION DONE. HOWEVER LINING UP FOR 4 HOURS TO PRESENT ,THEN BEING SENT AWAY TO CALL THE CLIENT FOR AN UPGRADED OFFER BECAUSE SEVERAL OTHERS ARE OVERBIDS CAN BE NERVEWRACKING FOR BOTH BUYER AND THEIR AGENT ESPECIALLY IF THEY HAVE LOST OFFERS ON OTHER HOUSES. ..BUT IN A BULLY SITUATION CLIENTS PANIC AND BID BEYOND THEIR MAXIMUM BUDGET FOR A HOUSE THAT MAY NEED CONSIDERABLE EXPENSIVE WORK.WITH NO INSPECTION CLAUSE.
    ANOTHER PROBLEM IS AGENTS WHO INTENTIONALLY UNDER PRICE PROPERTY TO ATTRACT BUYERS...A BIT LIKE THE OLD "BAIT AND SWITCH" CONS. EITHER THE AGENT HAS NO IDEA OF THE VALUE OR THEY ARE FISHING FOR CLIENTS ..OR.. THEY ARE HOPING TO GET A FLOOD OF OFFERS ON WHAT LOOKS LIKE A BARGAIN SO THAT COMPETITIVE OVERBIDDING WILL GET A MUCH HIGHER PRICE. A MORE HONEST WAY OF SELLING IN AN OVERHEATED MARKET WOULD BE TO SIMPLY HAVE AN OPEN AUCTIONON PROPERTIES WITH MULTIPLE BIDS. AT LEAST BUYERS WOULD KNOW WHAT THEY WERE BIDDING AGAINST AND SELLERS WOULD KNOW THEY HAD THE HIGHEST PRICE.
    MEANWHILE THE REPUTATION OF AGENTS IS GETTING WORSE AND WE ARE ALL "TARRED WITH THE SAME BRUSH"MANIPULATING .LIEING INCOMPETANT,ONLY INTERESTED IN THE MONEY,UNTRUSTWORTHY.ETC. AFTER 54 YEARS IN R.E. AS A HONEST BROKER THIS MAKES ME SAD.AND ASHAMED . BUYING A HOME IS SUCH AN IMPORTANT PART OF MOST PEOPLES LIVES AND OFTEN THE MOST EXPENSIVE INVESTMENT. IN HOT MARKETS ALL PARTIES WOULD BE BETTER SERVED BY OPEN AUCTIONS BETWEEN MULTIPLE BIDDERS.
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