Home sellers today are seeing an increase in multiple bids, or bidding wars. The best offer is accepted, but sometimes a real estate transaction will not go through. In that case, the home has to go back on the market. The only way around re-listing is to accept backup offers.
What is a backup offer?
A backup offer is an offer for your property that you are ready to accept if the primary offer doesn’t make it to the close of escrow. Real estate transactions can fall through for a variety of reasons, so it’s better to be safe. Backup offers, however, can be tricky. It’s important to know and consider the following 4 things about backups before you accept your first one.
1. A backup offer is as legally binding as a primary purchase agreement.
Make sure before accepting a backup offer that it is one you will be comfortable with as is. The difference between a primary offer and a backup offer is that the backup offer’s contractual viability is contingent on the primary offer not going to escrow. Once the primary offer falls through, the backup offer becomes a legally binding contract for the transfer of your home’s ownership.
2. Be straightforward.
Be polite. Be considerate. Maintaining positive relationships is very important to having a pleasant real estate experience, and ensuring future experiences are the same. So, if you are accepting a backup offer, make sure that both the backup home buyer and the buyer’s agent know that they are submitting a back up offer and not a primary one.
If the backup buyer thinks he is the primary buyer, you will find yourself in an uncomfortable and possibly tough situation.
3. Accept more than one backup offer.
Don’t be shy about accepting more than one backup offer. Anything can happen: your primary deal falls through and your backup buyer finds another house. Accept as many backups as buyers are willing to submit and then pick the best from there. Rank them according to your preference and let each potential buyer know where they stand on your list.
Make sure you are always honest and upfront with every buyer you deal with. It will make the process of selling your house much more relaxing.
4. They can be used as a tool to encourage hesitant home buyers.
Accepting a backup offer, even when you don’t see your current deal falling through, often encourages a hesitant buyer to stop stalling and commit to the purchase. If there are results of an inspection they are mulling over, accepting a backup offer will give your home the allure of being wanted.
As with any real estate transaction, accepting a backup offer and protecting yourself at the same time is a delicate interaction. Done wrong, and they become a headache or even a legal tangle. Contact a First Team agent in your area to help you deal with all the important details of selling your home, such as explaining more about ways that you can leverage backup offers. Our trained and experienced agents can help home sellers solve problems before they even begin.