By Ross Wilson

“Competition brings out the best in products and the worst in people.” – David Sarnoff

In this third and final segment on the hot subject of bidding wars, I draw some conclusions that lead to more questions. But consider that before we have the answers, we must ask the questions.

During my career, I orchestrated many multiple offer scenarios for my sellers. In earlier days, board rules permitted us to delay the showing commencement date as well as offers. I’d organize showings to begin – and offers to be presented – on the same day, usually a Saturday. On that first day, the property was usually a buzzing beehive of activity, with appointments scheduled every half hour, sometimes overlapping. Aside from the first and last showings of the day, the lockbox usually remained untouched, with business cards being exchanged between agents arriving and departing.



I also occasionally threw a public open house into the mix. Typically, during the presentation that same evening, the street was clogged with cars, anxious agents and lingering buyers, all caught up in the competitive frenzy. Even back then, though, some agent would seek to sneak in early with an offer conditional on satisfactory buyer inspection. Thankfully, my vendors normally adhered to the plan and rebuffed them. And did those overtly aggressive agents show up at offer time? Always.  I don’t recall ever losing one.

Ignoring your carefully formulated plans, with the deliberate intent to avoid a competition, an aggressive buyer agent may contact you to register on your new listing what has become known as a “bully offer”. They demand an appointment prior to the officially announced presentation date. Since you’re convinced of the merits of your marketing strategy, you encourage your seller to make this insistent agent wait.

A seller certainly has the right to refuse to see this “short-circuit” offer, but curiosity sometimes gets the best of them. It’s mystifying why they’d sacrifice an opportunity for multiple showings and offers by surrendering to a bully’s attempt to evade a fair competition. Obviously, you must comply with your principle’s instruction. However, before committing to an earlier date and all that entails, ask the buyer agent about the offer. If the major terms are unacceptable, advise your seller to stick to the original plan. But if it’s full asking price or more, with no conditions, they may not gamble losing it.

In accordance with industry rules – and prior to viewing the bully offer – the MLS listing must immediately be amended with the new presentation date and time. Plus all agents who have already shown the property, have confirmed but outstanding appointments or have expressed interest, must be promptly informed of the new arrangements. If they haven’t already done so, all buyer candidates must quickly scramble to view the property and register their offers. Unfortunately, some may be unable to act swiftly enough. So, your seller might lose them. By caving to a bully’s demand, they’ll never know if that lost buyer might have been The One.

Given such short notice, the buyers who weren’t able to act in time are grievously disappointed and sometimes very angry with our industry and its members. It could be argued that your seller was formally tendering for competitive bids, but at the last moment, chose to dishonour their commitment to await all comers. What can a disappointed buyer do about it? Well, it’s been opined that an aggrieved buyer could sue the seller and their agent for damages. I’m unaware of any precedent-setting court case to date, but it could happen anytime. All it will take is a sufficiently disturbed buyer with deep pockets. Listing agents beware.

Does greed get the best of people? Yes, I suppose it sometimes does. Some argue that buyers who dodge the rules of fair play for their own advantage are indeed avaricious and iniquitous. Is a bully buyer innocent? Do they have the right to be aggressive? Obviously, the technical answer is yes, for they certainly have the right to buy at the lowest possible price. The same argument could be made for an aggressive seller who wants the highest price possible. But if a bully buyer deliberately ignores a seller’s clearly stated procedural request regarding the marketing of their own property and attempts to circumvent the system, are they behaving morally? I suggest that they’re demonstrating a complete lack of respect for not only the seller’s wishes, but potentially our rules of service. In my view, this is not representative of innocence. Bully buyers are no different from movie patrons who butt into line ahead of other people patiently waiting their turn.

It’s also been said that sellers could refuse to comply with a bully’s demand, that those who agree to this marketing strategy are also selfish and greedy and knowingly contribute to the inflation of market values, not to mention a highly stressful and potentially devastating experience for many buyers.

Some have suggested that sellers can be bullies too. However, they’re certainly entitled to attempt to maximize the sale price of their own property by any available legal means. And by agreeing to a viewing period and delayed offer presentation day, are they not being fair by providing all interested buyers an opportunity to make a bid?

Further, is it not a major responsibility for a listing representative to do everything legally and ethically possible to get the best terms for their seller client? The strategy is designed to stimulate fair competition, which should result in a fair sale price based on supply and demand in a free democratic society.

Is the bully offer system undermining consumer confidence? Absolutely, especially with buyers willing to respectfully comply with the posted protocol but who are caught with their pants down by a bully jumping the queue. Nevertheless, until the rules change yet again, fair buyers must be prepared to respond to bully offer scenarios by viewing the property at the earliest opportunity.

As their representative, you should have your buyer’s offer documents prepared in advance and ready for presentation on short notice. To contribute to consumer confidence in our industry, listing agents who practice this legitimate hot-market strategy, which is more prevalent for city or suburban than rural, should carefully prepare their new seller for the distinct possibility of a bully offer. Ask your seller to adhere to the plan or risk trouble for both you and them. The reputation of our industry is at stake.

“When a resolute young fellow steps up to the great bully, the world, and takes him boldly by the beard, he is often surprised to find it comes off in his hand, and that it was only tied on to scare away the timid adventurers.” – Ralph Waldo Emerson

6 COMMENTS

  1. Anyone can write—and present—an offer on any property at any time, whether it is even for sale, or not, whether it is listed for sale with a brokerage, or not, whether it is listed for sale with a brokerage containing attached conditions for the submission of offers, or not. To repeat, a potential buyer can do whatever he/she wants to do regarding offering a purchase price with attendant conditions at any time, and present said offer to a property owner at any time, whether the owner wants an offer or not. It is entirely up to the property owner to accept or refuse any offer, or not, at any time, listed with a brokerage, or not, whether it complies with listing terms, if so listed, or not. If someone is unhappy about what an owner does or does not do, then one can resort to the courts for redress if one thinks on balance that it is worth the time, effort and expense.

    Any seller can violate the terms of a listing agreement (to sell) at any time for any reason at his/her discretion. If this happens, then it is up to the brokerage to sue the seller for damages, or not (if a sale has been agreed to by the seller) based upon the wording in the agreement that forms the contract portion of the APS regarding the payment of commission, and it is up to any disenfranchised buyer to sue the seller and/or brokerage for damages, or specific performance, or not, if he/she is not happy with the effects of any failure to transact that occurs, within or without the terms of a listing agreement, which falls outside of said buyer’s field of influence that he/she believes negatively affects his/her financial status. This is why we have courts.

    Of course everyone wants to avoid going to court over issues like those described above, and thus, rules and regulations are put in place, hopefully to be honoured by all who subscribe to same. But there is no law that says one ‘must’ obey what one has agreed to, only that there are potential financial penalties for not doing so if a court agrees with a plaintiff’s argument. Therein lies the rub: Is it worth all of the time, effort and financial drain required to win a long, drawn-out court case when it is much easier–and likely cheaper (unless prices are rising rapidly)—to buy another property? The answer is usually “yes”…unless one has become emotionally attached to what one wants. Then rationale goes right out the window.

    Ross is correct: The seller pays the entire commission if it is so stated within the listing agreement and APS. This reality has been debated ad nauseum. The commission comes right off of the purchase price, plain and simple. The seller is left with the difference. The ‘buyer’, therefore, is actually paying for the property a ‘lower’ price (the agreed-to price ‘less’ the commission) and therefore is paying the ‘full’ commission to the selling ‘and’ buying brokerages after the seller’s lawyer has collected and disbursed it. There is simply no getting around this reality, no matter how complicated some want to make it out to be. This is partially why the price of real estate continues to rise, even if there is no other reason for it to do so. Supply and demand has nothing to do with price-rise due to the commission inclusion factor. Of course, sellers may make other personally tailored commission paying arrangements not dealt with herein.

    To be blunt: A seller has the right to obtain the best deal possible for his/her property, whether by perceived ethical means or not It is incumbent upon a seller to protect one’s own financial interests, but one does run the risk of paying a financial price if a court of law finds for a disaffected plaintiff, if indeed one materializes. That is just the way it is. The choice always belongs to the seller, because ownership is indeed nine tenths of the law.

    • Well said as usual, Brian. We can only hope, however, that consumers and members of the real estate industry will always behave in a rational and honest manner. Oh, but we can dream, eh?

  2. Thanks for your comments, Jim. However, I did my best to remain somewhat impartial by presenting arguments for both sides of the issue. However, I’m sure you agree that in the vast majority of cases, it’s the seller who pays the commission. They own the property. And in a low-supply/high-demand market, listings are “gold”. Thus, we should not expect homeowners and listing agents to mend their ways any time soon.

    Everyone has a wish-list, Jim, including buyers and sellers. Frankly, I don’t understand the reference in this regard. The issue is whether our Rules and Regulations should be amended to block the so-called bully offer system to protect homeowners and brokerages from potential litigation. And don’t forget what this practice is doing to the industry’s reputation when frustrated buyers angrily blame Realtors for their loss. No doubt you’re heard the expression that bad news travels faster than good. Unfortunately, it’s the foundation on which our entire media system in built. Remember the anchor person on the nightly news who begins by saying good evening, and then proceeds to explain why it is not?

    As I’ve said, sellers and buyers can continue to act as they have while attempting to get the highest or lowest price, respectively. What will bring about a change of the bully-offer system? One of two events will have to occur. Like a municipal government, after a child is struck by a car at a notoriously busy intersection, finally installs a stop sign, a sufficiently disturbed buyer sues a seller and their listing brokerage for reneging on their tender for bids. Something will have to happen to ignite a change. The second event would be when someone with foresight and influence actually takes action to initiate the necessary change. But knowing how the system “works”, I suggest it will be the former.

    • Hi Ross,

      First on a lighter note, it would appear that a misspelled last name has made me Danish … YAAAAH !

      To clarify what I meant by wish list: any listing contains a number of what I call wishes which include list price, closing date, appliances included, rental contracts, etc. Someone making an offer will often choose their own preferences, thus my labeling it as a wish list. Just because the Seller wants it doesn’t mean it going to happen.

      Now with respect to your comments about protecting from litigation, I would suggest that if the the realtor/brokerage is doing their job, then there shouldn’t be a problem. Sure, sometimes mistakes are made and that is why we have insurance. The problem in our industry is that we have this abundance of rules which are largely not enforced, and when they are they usually result in a slap in the wrist or any punishment/sanctions are just deemed.. cost of doing business. Perhaps a little legal action would have a better effect. We belong to a profession that requires little to get into in terms of time, knowledge and investment. In fact, there are more regulations and education required for someone to operate an inflated jumpy castle than to handle the largest financial transaction in most peoples lives. Small wonder that the profession is disparaged.

      Let me share a personal experience with you. The house my daughter purchased was listed on a Friday morning. I booked a showing for about 5:30 pm I think. Offers were to be done Sunday evening. I get notified before the showing that they had received an offer and had decided to review others the Friday night. I believe all other reps were notified as well. Before I even showed the house I had an offer done up ready for any minor changes … and circumstances. So, there i am sitting in my truck with a ready offer come offer time. Fortunately, my offer was accepted out of the five (I’m awesome, what can I say). So here is what I took away from the experience: be ready … that is what we are paid for. Does my portable wireless battery operated printer cost me extra ? Absolutely, but let me reuse the phrase “cost of doing business”. Second thing I took away was that I believe the listing agents did their clients no favour by taking offers early. Weekend open houses didn’t take place (ours was a firm non conditional offer) so there was next to no exposure in a busy market. Realtors who may have had interested clients may have had no opportunity to show the property due to the shortened timeline. In the end, it is my firm belief that the property sold for less that it would otherwise due to the early acceptance. Good for my daughter, not so good for Seller. Point of this story is that it is not our job to protect the poor Realtors / Brokerages from liability. The rules and forms are already in place. Beef up the enforcement and penalties. Make Realtors responsible for their actions. Make Realtors do their job.

      • I now understand your meaning about wish lists. I have one every morning when I awaken; hot water for a shower, a good nutritional breakfast, sunshine outdoors, etc. I’m retired from the business, after all, so they’re not complicated.

        I agree with you in every other respect, though I cringe when someone refers to the real estate industry as a “profession”. Some are pros, but sadly, many are definitely not. Standards really need increasing.

        I also agree with the lessons derived from your personal experience with your daughter’s purchase. If it was that listing agent’s recommendation to see the offers early, then they did their clients a serious disservice. But I believe that most, if not all of that type of agent are eventually drummed out of the business.

  3. Some good points made in article but it seems that all the arguments are made in favour of the Sellers right to ado things their way. I won’t get into whether set offer dates are fair or not but I think it’s safe to say that they are not always at altruistic. Like every other point in listing the price etc is a “wish” on the part of the Seller and doesn’t necessarily mean they are going to get it so why should the offer date be any different As an agent do your job and discuss this with the Seller and get a form 244 filled out PROPERLY in advance and you won’t have this issue. Barring that, the Buyer is free to do what they want, and in fact could still submit the bully offer but if a form 244 is properly done then the offer will sit on the shelf and collect dust. I challenge you to cite a law or rule that prevents a bully offer. Wish lists are just that … wishes

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