What Is A Pre-emptive Offer?
There are a few different strategies homeowners will use to try to generate as much interest as possible when selling their house. Sometimes, they will agree to look at offers anytime. However, in an exceptionally busy market, like we saw earlier this year, they’ll often set a specific date before they’ll even begin considering offers.
If a potential buyer wants to get ahead of that date, they can submit what is called a pre-emptive or “bully” offer.
With a pre-emptive offer, the potential buyer tries to “bully” the seller into entertaining the offer before the official date. It’s a common tactic when the demand for housing greatly outstrips the limited supply.
As the market cools down, pre-emptive offers are less frequent. However, they still happen in specific neighbourhoods on very desirable properties.
What Is The Purpose Of A Pre-Emptive Offer?
The purpose of a pre-emptive offer is to present the seller with an offer that they feel is good enough or better than what the seller was anticipating. The goal is that the seller will want to accept it right then and there and forgo the offer date. Generally, a pre-emptive offer provides an attractive price that makes the seller take notice. The buyer already has their deposit ready and places no conditions (often referred to as a firm offer). In addition, a buyer’s agent will typically allow a very short turnaround time to catch other buyers off guard and force the seller into a quick decision.
Of course, the sellers are under no obligation to accept or even consider a pre-emptive offer. They can hold out for their designated date in the hopes that a better offer will come along.
Are you thinking of selling your home soon? Here are some resources that will help you during any market conditions:
- Is Staging Your House to Sell Still a Good Idea?
- Home Renovations to Avoid When Selling
- Selling Your Home? Here’s How to Maximize its Value in Any Market
- Home Renovations To Improve Your Resale Value
What Sellers Should Consider When Receiving A Pre-Emptive Offer
Getting a pre-emptive offer can be an excellent sign that buyers are very interested in your property. Deciding whether or not to accept it can be stressful. You usually have a short period of time to weigh the offer, which does not give you much of a chance to determine whether it is beneficial to you.
- If you accept, you have the benefit of a quick sale. You’ll earn as much, maybe even more, than you were hoping for. Best of all, all the hard work of keeping your home in tip-top shape for showings is over! There is no need for marketing or negotiating, and you can begin the closing process. On the downside, you may always wonder if you could have received a higher price if you had waited. Accepting a pre-emptive offer might be the best option if the market is slow and the price is right.
- If you refuse, you can hold out hope that you’ll get a better offer once your designated date rolls around, but there is no guarantee. In the worst-case scenario, you may find yourself selling your house for less than you thought, especially if the market experiences a downturn. If your real estate agent firmly believes that your home will attract multiple buyers, you might want to wait to see what happens.
Many listings agents advise their clients against accepting pre-emptive offers unless they are sure it represents the best possible value. It really depends on the market overall, as well as the micro-conditions in the particular area where the house is located.
What Buyers Should Know Before Submitting A Pre-Emptive Offer
Placing a pre-emptive offer can be risky for the buyer because it increases your chances of overpaying. In slower markets, you may want to avoid them and move on to the next listing – unless you have your heart set on a specific property.
- Placing a pre-emptive offer increases your chances of succeeding with your purchase. If the seller refuses, you can always come back with a more substantial offer on the designated date. At this point, you may have to compete with other buyers who are also vying for the home.
- If the seller accepts, the stress and hard work of searching for your new home are over, and you can start planning your move. The key is to determine the precise range where both you and the seller feel that you have received fair value. Otherwise, you’ll always wonder if you paid too much and may even start to regret your purchase. An experienced local real estate agent can help you determine fair market value and whether a pre-emptive offer will benefit you.
Are you looking for your next home in Toronto? Here are some ideas to ponder:
Before buying or selling, it’s essential that you understand the market and how much the house is worth. Working with an agent that can walk you through the ins and outs can help you determine how and whether to proceed with a pre-emptive offer.
.As you can see, doing your research before making any decisions is critical. Hopefully, this has provided a basic overview and armed you with some knowledge on the matter!
Do you want some expert advice on how to submit a pre-emptive offer? We’d love to help you. Let’s talk about it! You can ask us anything right here.
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