With the arrival of Spring, new MLS listings are being added daily with sellers who’ve been putting off listing their homes now joining Markham and Stouffville’s spring real estate market. With limited houses for sale and an increase in active buyers, a seller’s market is pushing the Region of York for record-breaking sales. However, many home sellers may be on the receiving end of bully offers trying to land their dream home before it even makes it to the market.
The Offer Process in a Regular Market
Buyers work closely with Benczik Team Realty members to submit the best offer for the house they’re interested in buying. We include any necessary terms & conditions suitable for their offer, including the price, the closing date, and the amount of their deposit.
According to Ontario’s Real Estate and Business Brokers Act’s (2002) Code of Ethics, a seller’s real estate agent must show a buyer’s written, submitted offer to the home owner as soon as it is practically possible — giving buyers the peace of mind knowing their offer is considered by the homeowner themselves.
As of July 1, 2015, Ontario’s Bill 55 introduced a major regulation update for the buyer’s offer process. Offers can only be considered registered if they are made in writing and signed by the party making the offer. Verbal offers or offers made in writing but aren’t signed by the interested buyers making the offer are no longer considered registered — therefore, the seller’s real estate representative no longer has an obligation to show these types of offers to their clients.
Bully Offers in Markham’s Seller’s Market
In Greater Toronto Area’s (GTA) increasingly competitive real estate market, property prices are on pace for another record-breaking sales year and double-digit price growth as buyers are aggressively bidding for the limited number of houses on the market.
Sales in the first quarter of 2016 rose 15.8 percent in comparison to the same three months in 2015, with the average selling price ($688,181) in the GTA up 12.1 percent over the last twelve months.
How do Bully Offers Work?
Bully offers present homeowners with an offer generally higher than their asking price, carry little or no conditions on the sale but have a set time-frame for acceptance. The more appealing the offer, the better chance of having the seller accept.
York Region’s limited real estate for sale is pushing more buyers to make those hard-to-resist bully offers days before the seller is officially accepting bids, attempting to grab the upper-hand.
Do Bully Offers Always Win?
Although bully offers are often accepted, even on properties expecting multiple offers, sellers must weigh the sure sale against the uncertainty of the bids submitted on offer day.
Bully offers are more tempting than they may seem. Sellers win when the accepted bully offer is much more than they had expected.
On the other hand, with a bidding war, sellers may be offered much more than presented in a bully offer. If they reject the pre-emptive offer, they run the risk of being offered less on their official offer day.
Should I Entertain a Bully Offer?
It’s best to discuss your offer options with your Benczik Team Realty member, as sellers have the choice of refusing your option to submit a bully offer. Your real estate buying agent will have a better idea of what to expect for the home you’re interested in buying and its stand in the market.
Same goes for sellers: ask your selling agent how many offers they are expecting, as your agent will be in touch with other agents before offer day, giving them an idea of possible buyers interested in your home. You’ll need to weigh the potential number of offers against the bully offer to determine how much you can actually expect: only a few offers coming in, accepting the bully offer might be the best option; multiple offers, your odds are better to wait for a possible bidding war.
Submit Bully Offers with Caution!
Submitting pre-emptive offers in a seller’s market is tempting. And might be the right course of action. Buyer beware, though.
A bully offer might be the right course of action for a home you’re interested in and is likely to get a lot of attention. It gives the seller something to think about before they have time to consider other offers on the table. However, sellers aren’t always interested in entertaining a bully offer, and you might not have another chance to submit a bid on the home on offer day with other buyers.
Discuss all your options for submitting the best bid if you’re in the market for a new home this summer. Listing your home? Have a conversation with your Benczik Team Realty selling agent as to the best course of action for your home and whether entertaining bully offers are in your best interest.