Pre-emptive offer (bully offer)선제 오퍼 (불리 오퍼)

What is it?

A pre-emptive offer is an offer (a written proposal to buy) made before the date the seller announced for reviewing offers. The buyer is trying to get the home before competing with other buyers, which is why it is called a "pre-emptive" offer or, more commonly, a "bully" offer.

RECO (the regulator of real estate agents in Ontario) defines it as an offer where the buyer does not follow the process the seller set out to delay offers, or other process conditions. Most come from homes with a set offer date, but an offer that breaks any other condition counts too.

Why do they happen?

In Toronto and the GTA, popular homes are often listed with a "holding offers" strategy: showings for several days, then all offers reviewed on one date. A buyer who really wants the home may offer early, to avoid a crowded offer night.

A bully offer usually comes with a very short irrevocable time (the deadline for the other side to answer), such as "until 11 p.m. tonight". The goal is to stop the seller from waiting for other offers. RECO Bulletin 4.3 notes that these offers often include a particularly short irrevocable period.

The price is usually high enough to make the seller give up waiting, but there is no rule that it must be.

What must the seller’s agent do?

The law and RECO Bulletins 4.2 and 4.3 require the listing agent to do the following.

• Pass every written offer to the client as soon as possible. The only exception is when the client (the seller) has given clear, detailed written direction to do otherwise.
• To hold offers until a date, that written direction must also say exactly how pre-emptive offers are to be handled. A one-line instruction "do not show me offers until <date>" is not enough.
• A listing note like "seller reserves the right to view pre-emptive offers without notice" does not satisfy the agent’s duties. RECO says it does not ensure a fair process and could be misleading.
• If the seller decides to review a bully offer, the agent must notify everyone who has shown interest in the home, in writing (text and email are acceptable). The notice must give the new offer date and time, and say that a pre-emptive offer was received.
• "Interested parties" is broad: anyone who booked a showing, viewed the home (including at an open house), said they would be submitting an offer, or already submitted one.
• The listing notes (on the MLS and other platforms) must be updated right away to match the new direction.
• If the bully offer comes from the listing agent’s own buyer client, the agent must tell the other interested parties as soon as possible, and the multiple representation must be disclosed to all prospective buyers.

RECO’s four scenarios

These examples are from RECO Bulletin 4.3. Everything turns on what the seller wrote in the direction.

The dollar amounts are RECO’s example figures. The real threshold is whatever the seller decides.

If you are the buyer

• Ask first: have your agent find out whether the seller will consider pre-emptive offers. If the written direction says no, the agent cannot even pass your offer on.
• Register your interest: once you have viewed the home or told the listing brokerage you plan to offer, you are an "interested party" and must be notified if the seller decides to review a bully offer. That notice gives you a chance to submit your own.
• If you make a bully offer: it often needs a price and terms strong enough to make the seller stop waiting. Going over your budget or dropping the inspection and financing conditions is a serious risk. RECO warns that pre-qualifying for a mortgage does not make it safe to drop the financing condition.
• You set the irrevocable time: a short one pressures the seller, but if it is too short the seller may not even have time to notify other interested buyers and may just let it expire. Decide with your agent.
• A rejected bully offer is not the end. You can offer again on the offer date.

If you are the seller

• Decide how to handle pre-emptive offers before you set an offer date. Your agent must explain how, when and why they might arrive, and the benefits and risks of each option.
• The usual options are: do not tell me at all until the offer date; tell me one arrived but not the details; or show me only offers above a certain price or without certain conditions. Whatever you choose must be written clearly in the direction.
• You can change your mind with a new written direction. But then your agent must update the listing and notify every interested party, so it is cleaner to decide well at the start.
• Accepting a bully offer ends the competition on the offer date. You give up the chance of a higher offer, so judge it with your agent against recent sale prices.

If the process was unfair

If a listing agent moves the offer date without written direction, or accepts their own client’s bully offer without telling other interested buyers, you can complain to RECO. RECO checks the written directions, copies of all offers and the listing notes.

In one published case, an agent moved up the review date for their own buyer client without the sellers’ written direction and did not notify other buyers. RECO’s discipline committee ordered a $14,000 fine and an education course (the case was decided under the old REBBA rules).

Example