The bully, at one time a reference to the menacing figure on the schoolyard or bus, is now also the intimidating player in real estate.
The bully has moved into your living room.
The Oxford Dictionary defines the term as "a person who uses strength or influence to harm or intimidate those who are weaker."
In real estate the term bully takes on a more varied meeting. If a buyer and his/her agent try to submit an offer before the offer date, they are referred to as a "bully".
But isn’t it the listing agent who is doing the bullying? Intimidating buyers by creating a false sense of affordability and setting the stage for a multiple offer situation, especially common today in the Toronto housing market, hoping the buyers’ emotions will get the best of them?
Is it possible the finger has been pointed in the wrong direction all this time?
The idea of the bully offer has always been to limit or possibly eliminate the competition by changing the set offer date to an earlier time frame and shortening the period for the seller to accept it. So, what is wrong with that? Why are they considered the bully? They see a house they want, and they want to buy it, now! What if the offer date doesn't work with their schedule, what if they found the home of their dreams and don't want to wait a week? Maybe they are willing to pay top dollar, or what they perceive to be top dollar, and just don't want to be involved with multiple offers.
Let's look at the listing agent’s role in the selling process. The listing is signed. Together, the listing agent and seller come up with a plan to sell the home. If the house is being positioned to bring in multiple offers then the plan often starts with an attractive asking price, often below market value. They then set an offer date. Some realtors might add to the brokerage remarks on the MLS listings that “The seller reserves the right to consider pre-emptive offers”, or perhaps they say “The seller will not consider bully offers.” This is a sign the realtor has gone over both the pros and cons of accepting or not accepting a bully offer.
Recently, the Real Estate Council of Ontario stepped in to remind realtors of the rules and obligations to clients regarding multiple offers and bully offers. Details can be seen here.
Next comes the offer date. Let's talk about this Fight Club. There are different ways the offer presentation can be arranged, but ultimately the listing realtor, with the seller's direction, will set the stage on how the presentation will unfold. In a traditional offer presentation the listing agent will dangle the carrot and herd all of the buyers and their agents to the same place at the same time to battle it out for the grand prize. The intimidation factor is heavy as often times more than a dozen cars line a street.
Realtors are summoned into the house or real estate office one at a time. Each realtor tries to feel out the seller and listing agent, trying to get a read on where they stand in the pecking order. The competition is fierce, bringing on a palpitating energy and creating an intense, nerve-wracking setting. The hopeful buyer and their realtor begin to wonder: ‘Are we close? Should we improve our offer?’
They wait and wait and wait for an answer. ‘Does the seller and listing realtor already know who the winner is? Are they making us sweat on purpose? Why are we waiting so long?’ A car drives off and they think to themselves ‘good, one less offer to contend with.’
Beads of sweat.
‘Are we still in the running? How close are we? We should really improve our offer.’
This situation is often incredibly emotional — especially for everyone sitting on the wrong side of the door.
Did the listing realtor possibly intimidate the buyers and their realtor by creating this heightened setting, hoping the buyers’ emotions would get the best of them and cause them to possibly overextend themselves?
Further, what if the listing agent and seller had chosen to have all the offers faxed or emailed in. Wasn't the listing realtor in control in both of these situations? Sounds like the dictionary definition of “bully."
However, let's not bestow the title of bully on the listing realtor so quickly. There is a good chance, in some situations, that the buyers’ realtor was quick on the draw. Perhaps, the buyers’ realtor was able to control the situation prior to the offer date and get the deal done for the buyer, possibly saving the buyer money they would have had to spend if the property had gone into multiple offers. Would you call the buyers’ agent a bully, or just a good negotiator?
Maybe the individual who coined the term “pre-emptive offer” was onto something — it wasn't simply to glamorize the term “bully offer”, but to call the offer what it truly is (as described by Google): a bid, typically an opening bid, intended to be so high that it prevents or interferes with effective bidding by the opponents.
Regardless of which side of the ring you are on, it is time to change the way we think and call these so-called bullies what they really are: good negotiators who know how to control a situation.
If you are considering selling or buying a home think carefully about who you want in your corner: Do you want a nervous realtor who will crumble when the going gets tough, or do you want a creative negotiator — who might sometimes be called a bully — who can get you the results you deserve?