What is a Preemptive or “Bully" Offer?

A preemptive offer is a proposal to someone to secure a deal or opportunity before others can. 

In a competitive real estate market or in specific “High-demand neighbourhoods,” properties can attract a lot of interest and quickly receive multiple offers. Preemptive or “bully” offers are a way for buyers to try and get ahead of the crowd and for sellers to get a higher-than-anticipated price for their homes. By submitting an offer before the designated date when the seller plans to review all offers, a buyer hopes to secure the property without competing with others. 

HERE IS A BREAKDOWN OF HOW IT WORKS

1. Timing: The seller sets a specific date for reviewing offers to create a sense of competition among potential buyers.
2. Preemptive Offer: A buyer makes an offer before this date, often with strong, solid terms or a higher price, hoping to prompt the seller to consider it immediately rather than wait for the official review date.
3. Market Conditions: This tactic tends to be more common in hot markets with high demand and low inventory. However, in cooler markets, where demand is less intense, preemptive offers are less frequent except in high-demand neighbourhoods.
4. Seller's Decision: While preemptive offers can be an excellent sign of interest in your property, deciding to accept, reject, or counter the preemptive offer can be stressful without expert advice from a seasoned agent. Accepting a Preemptive Offer:
   Advantages:
• Quick Sale: Accepting a preemptive offer can expedite the sale process, which might be advantageous if you need to move quickly or if the market is showing signs of slowing down.
• Convenience: You avoid the need for further showings, marketing efforts, and negotiations, which can be time-consuming and stressful.
• Potentially High Offer: If the preemptive offer is strong, it might meet or exceed your expectations, giving you a satisfactory outcome without the uncertainty of future offers.
5. Disadvantages:
• Missed Opportunities: There’s a chance you could have received a higher offer if you had waited for the official review date. This is particularly relevant in a very hot market where multiple offers might drive up the price.
• Decision Pressure: The short timeframe to decide on a preemptive offer can be stressful and might lead to hasty decisions without ample time for reflection.
6. Rejecting a Preemptive Offer:
   Advantages:
• Potential for Higher Offer: By sticking to your planned offer date, you might attract multiple offers, potentially driving up the price through competition.
• Market Dynamics: If your agent believes there’s a strong likelihood of getting better offers, waiting could be advantageous.
7. Disadvantages:
• Market Risk: If the market conditions change or if the number of interested buyers decreases, you might end up receiving lower offers or even struggle to sell.
• Uncertainty: There’s no guarantee that waiting will result in better offers, and you might end up with fewer or less competitive proposals.
8.  Buyer's Decision:
   When a buyer submits a preemptive or "bully” offer, sometimes with no conditions, also known as a firm offer, they make their proposal even more attractive to the seller. Here's why these elements are significant:
   Advantages for the Buyer:
• Early Advantage: Buyers can secure the property before competition intensifies by making an offer before the official review date. This can be crucial in a hot market with high demand and limited supply.
• Reduced Competition: Submitting a preemptive offer helps avoid bidding wars that might drive up the price. If the offer is strong and accepted early, buyers can avoid the stress and unpredictability of competing against other offers.
• Potential for a Better Deal: If the buyer’s offer is attractive enough, they might be able to negotiate favourable terms with the seller, such as a lower purchase price or better closing conditions, by making their offer stand out.
• Faster Purchase Process: A firm offer with no conditions and immediate deposit can expedite the closing process, allowing the buyer to move into their new home sooner.
9. Disadvantages for the Buyer:
• Pressure and Uncertainty: Buyers must make quick decisions with limited time to evaluate the offer thoroughly. This can lead to stress and the potential for second-guessing if the offer is accepted, and the buyer later questions whether they might have paid too much or missed out on better terms.
• Possible Overpayment: Without waiting to see if other offers come in, buyers might risk overpaying. If the market is slow or if the property isn’t as desirable to other buyers, the buyer might have offered more than necessary to secure the property.
• Risk of Rejection: There’s always a chance that the seller may not accept the preemptive offer, especially if it’s lower than their expectations or if they prefer to wait for the official offer date to potentially get better offers.
• Limited Negotiation: A preemptive offer might not leave much room for negotiation. If the buyer offers a firm offer with no conditions, they might not have much leverage to request additional concessions or adjustments.
10. Key Considerations for Buyers:
• Market Conditions: Assess the current market environment with your real estate agent. In a highly competitive market, a preemptive offer might be more strategic, but in a slower market, it might be less necessary.
• Offer Strength: Ensure the offer is compelling enough to get the seller’s attention. This includes a strong purchase price, immediate deposit, and clear, favorable terms.
• Financial Readiness: Confirm that you’re in a strong position to make a firm offer with no conditions, and ensure that you have the necessary funds and financing in place.
• Advice from Professionals: Consult with your real estate agent to understand the seller’s situation and the likelihood of a preemptive offer being successful. Your agent can provide insights into the property's value and help you craft a competitive offer.
11. In summary, while a preemptive offer can be a powerful strategy to secure a property quickly and avoid competition, it requires careful consideration of market conditions, financial readiness, and professional advice.

Final Considerations:

• Market Conditions: Assess the overall market and local conditions with your real estate agent. In a hot market, waiting might be worth it, but in a cooling market, a preemptive offer might be more appealing.
• Personal Situation: Consider your own timeline and financial needs. If a quick sale is crucial, accepting a strong preemptive offer might be the best choice.
• Advice from Professionals: Your real estate agent’s expertise and understanding of your property’s market value and local trends are crucial in making an informed decision.

Ultimately, the decision to submit, accept or reject a preemptive offer should align with your goals, market conditions, and the advice of your real estate professional.

Please consult with me, and I will be happy to provide more tailored advice. 416-418-8122