Are bully bids the newest dragon in Toronto real estate?

by Olivia D'Orazio29 Sep 2014
Realtors are criticizing a controversial buyer’s tactic – one increasingly viewed as the best weapon for fighting “seller greed.”

“It’s hard to work in this market when there are bully offers all over the place,” says Toronto Realtor David Fleming. “It happens all the time, and it’s frustrating for the buyers."

That frustration stems from the frenzy into which buyers are thrust when a bully bid suddenly appears. Buyers who expected to have several days to mull over a purchase bid are left rushing to make a decision once a bully offer is made.

Some agents believe bully bids are a valid response to the increasingly popular use of setting dates to receive offers, while others argue that bully bids are rule-breaking moves that undermine the entire profession.

But are bully bids really that bad? If a house is listed for sale and someone wants to buy it, what’s wrong with the transaction going through as soon as possible?

“The sellers have the final say,” Fleming says. “You can say ‘no bully offers’ on the MLS listing, but you can’t stop someone from submitting one and you can’t stop your sellers from looking at it.”

Fleming says the problem isn’t so prevalent in the outlying areas of the GTA or in Toronto’s condo market. But for the single-family homes, which are difficult to come by in the first place, bully bids are becoming more and more commonplace as buyers attempt to circumvent the exhausting bidding wars and jump straight to their top price for a property.

On the other hand, bully offers also tend to drive property prices up higher and faster; another thing that Fleming says is unavoidable.

“The market in Toronto will continue to do what it’s done: go up,” he says. “I don’t think it’s unrealistic or surprising, and with the lack of available homes and low interest rates and the net migration; I think that’s what going to happen this fall – prices will increase across the board.”
Are you finding a problem with bully bids? Let us know in the comments!


  • by DA 9/29/2014 11:17:19 AM

    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

  • by RT 9/29/2014 12:24:20 PM

    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!

  • by 9/29/2014 12:30:26 PM

    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.

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