Bully Offer / Pre-Emptive Offer

A bully offer, also known as a pre-emptive offer, is a purchase offer submitted before a seller’s scheduled offer date to secure a property ahead of competing buyers.

Entry – Quick Facts

• Submitted before the seller’s stated offer review date
• Intended to prompt an early seller decision by limiting time and competition
• Often priced above the list price
• Commonly removes conditions such as financing or home inspection
• Most frequently used in low-supply, high-demand Canadian housing markets

“A pre-emptive offer is one where a buyer does not comply with the process outlined by the seller to delay the presentation of offers or other process conditions.” – Real Estate Council of Ontario (RECO)

What Is a Bully Offer or Pre-Emptive Offer?

A bully offer is a real estate strategy used when a seller has announced a future offer date, but a buyer wants to avoid competing against other bidders. Rather than waiting for offer day, the buyer submits an early offer with strong terms, typically including a higher purchase price, fewer conditions, and a short irrevocable period.

The objective is to shift the seller’s decision-making from comparison to certainty. By offering speed and firmness, the buyer attempts to make early acceptance more attractive than waiting for multiple offers. Bully offers are most common in markets with tight inventory, where buyers anticipate intense competition and upward price pressure.

Sellers are not required to review or respond to bully offers. Whether a seller will consider an early offer depends on the seller’s instructions, risk tolerance, and expectations for market response on the scheduled offer date.

Why Do Bully Offers Matter for Canadian Mortgages?

Bully offers can materially increase borrower risk during the mortgage process. To strengthen a pre-emptive offer, buyers often remove financing conditions, committing to the purchase before a lender has completed full underwriting.

Pre-emptive offers increase exposure to appraisal risk. Lenders base mortgage approval on the property’s appraised value, not the agreed-upon purchase price. If the appraisal supports a lower value, the borrower must cover the difference with additional cash or renegotiate the transaction. In competitive markets, the widespread use of bully offers can also accelerate price increases, affecting affordability and borrowing limits tied to lender valuations.

How Do Bully or Pre-emptive Offers Compare to Other Offer Types?

Standard Offer

A standard offer is one in which the buyer submits on or after the seller’s offer date, allowing multiple buyers to compete openly. This process supports price discovery and gives buyers more time to complete due diligence before committing.

No-Conditions Offer

A no-conditions offer removes safeguards such as financing or inspection conditions. The buyer can submit a pre-emptive offer on the offer day or as part of a bully offer. When used pre-emptively, the lack of conditions significantly increases borrower exposure to financial and legal risk.

Blind Bidding vs Open Bidding

Most Canadian real estate transactions use blind bidding, where buyers cannot see competing offers. Bully offers operate outside this process by attempting to end the sale before competition occurs.

How Do Lenders Treat Bully or Pre-emptive Offers?

Lenders do not treat bully or pre-emptive offers differently from other purchase agreements. However, the structure of a bully offer can create additional challenges for borrowers. Without a financing condition, borrowers may proceed before income, credit, downpayment, and appraisers fully verify the property value under lender guidelines.

Appraisal risk is a key consideration. If the purchase price exceeds market value, the appraisal may come in lower, requiring the borrower to provide additional funds at closing. Borrowers considering a bully offer should have strong pre-approval, up-to-date documentation, and sufficient liquidity to address potential valuation gaps.

How a Bully Offer Works in Practice

A pre-emptive or bully offer allows the buyer to secure the property quickly, but assumes greater financial and legal risk if issues arise after acceptance. In a competitive market, a buyer may take the following steps:

Step 1: Identify a property with a future offer date and signs of strong buyer demand.

Step 2: Prepare an early offer above the list price with limited or no conditions.

Step 3: Set a short, irrevocable period to prompt a seller’s decision.

Step 4: The seller decides whether to accept an early offer or wait for competing offers.

Common Mistakes and Misunderstandings for Bully Offers

• Assuming a bully offer guarantees acceptance
• Believing a mortgage pre-approval ensures final lender approval
• Underestimating appraisal risk when bidding above market value
• Removing conditions without fully understanding legal exposure
• Expecting sellers to review early offers when they are not obligated to do so

Frequently Asked Questions (FAQ) About Bully Offers

Related Terms

• Blind Bidding
• Open Bidding
• No-Conditions Offer
• Appraisal
• Financing Condition
• Purchase Agreement