If you've been looking to buy a home in the GTA, chances are you've come up against a seller who has set an offer date: a specific time where they will be accepting and reviewing offers from all interested parties.
Properties that have offer dates (also known as “holding offers”) are commonly priced below market value to attract attention and are only on the market for a relatively short period – enough time to build up interest and exposure, but not long enough that buyers move on or interest wanes. Typical time on the market is 5-7 days and will generally cover a weekend to accommodate viewings.
Why do sellers set offer dates?
There's always the possibility that the sellers are busy or just want to make the process simpler for themselves. And of course, during COVID, many want to minimize contact with people by limiting showings to a couple of days.
But the more likely reason for setting an offer date is this: it’s a strategy to get the highest price. Competition and time pressure often push the purchase price of a property higher than buyers would go if they weren’t competing and/or had more time to think about it.
But there is one positive for buyers: an offer date actually gives buyers a fair shake at winning a high-demand property. Everyone has a few days to get in there for a showing, so you don’t have to worry about losing out because you couldn’t get to a showing fast enough. Unless of course, someone submits a bully offer. But more on that in a moment.
Does an offer date mean there will be a bidding war?
It’s likely, but a bidding war isn’t guaranteed. If they only get one offer on the offer date, there's no bidding war. But that’s why underpricing is usually part of the strategy: it’s designed to generate more interest and more competitive offers. If you’re looking at a property in a lower- or mid-range price point, especially in a high-demand area, be prepared for a bidding war.
What’s a bidding war?
The “war” happens if there are two or more offers that are close to each other. The seller's agent will come back and ask buyers if they're prepared to up their offer or remove any conditions. It can also happen if the offers aren't hitting what the seller actually wants for the property. This is where your agent’s skill and savvy come in: while they can’t ask outright what the sellers are expecting, there are ways to get a better idea to help you either win or decide you’re out of the running.
Read more: Bidding wars and bully offers: strategies for success
What strategies can buyers use to win on offer night?
It helps to remember that the sellers want two things: to make as much money as they can and experience as little hassle as possible. Here are a few tips for putting in a winning bid:
Make an offer with NO conditions. A firm offer will generally win over one that has conditions; conditions leave the door open to the deal falling through.
“Offer dates force buyers to do their homework ahead of time,” says Konrad Gloge, Sales Representative. “An offer with conditions on an offer date will almost always be turned down unless it’s so much higher than the rest that it’s worth the risk for the seller. So figure out your financing before you start looking, look at the status certificate (sellers who set offer dates will generally have it available), and be flexible on closing. It’s all about making it as easy as you can for the sellers to say yes to you.”
Show them the money. It goes without saying that you should offer as much as you can. But it will also give you an edge if you have your deposit ready to go – and if you have a higher than average deposit to show you're serious and demonstrate that financing won't pose an issue.
“Recently, my client went up against nine other offers, and his was the winning one,” says Konrad. “We knew there would be some heavy competition, so we came in with a 10% deposit to show we were committed and well-financed, and we delivered a bank draft along with the offer. That was our ace in the hole.”
Be ready to put an offer together quickly. If a bully offer comes in before the offer date, you need to be ready to move fast. The listing agent has to get in touch with other interested buyers to give them a chance to make their own offers.
Stay on top of how many offers have been submitted. This will give your agent a better idea of how high the price may go and what you’ll need to offer to have the winning bid.
Find out how the offers will be handled. Will everyone just have one shot or will you have a chance to come back with something higher? If it’s a one-shot thing, put your best foot forward by offering as much as you can, maybe leaving a small amount of wiggle room.
Consider submitting a bully offer. If it looks like you’re facing a lot of competition for a property you really want, coming in with an aggressive bid can put other buyers out of the running. It just has to be high enough to convince sellers they won't do better on offer night. Your agent can help you figure out a convincing number and the right timing for when to put an offer on a property.
“The best time to enter a bully offer is before the property has been on the market long,” says Konrad. “The seller hasn't had time to gauge interest yet and may be more receptive to the attractiveness of a big number or deposit.”
One thing to remember, however: not every seller will accept bully offers. The listing will usually say if they’re open to pre-emptive offers or not. Some because sellers don’t want the additional hassle of jumping to attention every time a bully offer comes in.
Buyers have the right to know how many offers are on the table before they present theirs. Knowing that number can help you determine how much of a bully you need to be and help keep you from overbidding. But do remember that a bully offer isn't a guarantee. It's not unusual for sellers to reject your offer to see what offer night might bring. And once the sellers notify other buyers of your offer, you could end up facing competing bullies.
I’m selling my home, should I set an offer date?
Offer dates are a useful tool for a seller to take advantage (see: profit) from buyer exuberance, and they are an increasingly common strategy in a hot seller’s market. Your agent will help you decide on the best plan of action.
“In most cases, if handled properly, an offer date will give you the best chance of getting top dollar,” says Konrad. “However, certain types of properties will do better than others, so you need to gauge the buyer pool. High-value properties generally have a small, select pool of buyers and offer dates will be a waste of time. Similarly, properties that need a lot of work or don't show well may not generate a lot of interest.”