What Are Bidding Wars and Bully Bids?

By: Christopher Toste

What Are Bidding Wars and Bully Bids?

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In the real estate market, it isn’t uncommon to hear about bidding wars and bully bids. These tactics are not my favourite but it is important for both buyers and sellers to know about.
 

Bidding Wars
 

Bidding wars are when a realtor and the seller have aggressively priced their property and have chosen a day to convey all offers.

This is done in hopes that multiple buyers bid on the same property. Similar to an auction, a bidding war often occurs at a rapid pace, meaning that during a bidding war a potential buyer can be vulnerable to making rash or emotional investment decisions.
 

Why does it happen?


It is very simple – economics 101. With a low supply of housing and a high demand, it creates an aggressive market.

Bully Bids


Bully bids is when a buyer submits an offer substantially over listing price prior to the offer date and with a short window for acceptance. This is done in hopes to avoid competing with other buyers and pressure the seller into accepting the bid.

Bully bids put the seller in a hard spot for several reasons:
  Due to the limited time to accept the bully offer it’s very hard to organize all the other agents, and their buyers, that have seen the property to make competing bids. This limited of the competition is what the bully bid is meant to do, however, closing out competing offers may not be in the best interests of the seller.
Emotions can run high when selling your home and there are many strategies that buyers can pursue to purchase the property on their terms. With an experienced realtor by your side, they can guide you through the process. Keeping your best interests front and centre.

If you are looking to purchase or sell a home and have questions around bidding wars and bully bids, don’t hesitate to contact me as I would be happy to help.
 
 

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