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 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 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:
- Accepting to consider the bully offer changes the offer date immediately and all others can now make competing bids.
- Bully offers rarely allow enough time for competing offers to be made, as they generally have a short window of time to allow the offer to be accepted. Since all offers need to be presented to the seller, even offers before the offer date, a bully offer that has a limited shelf life and is over asking is usually accepted.
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.