What Is A Backup Offer And How Does It Work
By Kurt Real Estate Nov 23, 2019
Some buyers spend months searching for the home of their dreams and, when they finally find it, they are crushed to learn an offer has already been accepted. You know that the sellers are accepting back-up offers, but what does that really mean? Does your back-up offer actually stand a chance?
Though it may be a long-shot, it could be worthwhile should the existing deal fall through. Deals can fail for numerous reasons from loan approval issues to repair disputes. If you put in a back-up offer, you’ve positioned yourself to potentially get the house.
Locking in a back-up offer can be a wise decision in a competitive marketplace with low inventory. In a seller’s market, if the deal falls through, you could then find yourself involved in a bidding war, driving up the price. However, if you have a back-up offer locked in, you avoid this competition and possibly paying a higher price.
This can also be very reassuring for a when a buyer is being difficult or may lead the seller to believe they cannot actually afford the property. As a seller, when you begin to pick up on signs that the deal may fall apart, you can rest-assured that you have a back-up a plan.
When making a back-up offer, personalize your offer. As a buyer, you want your back-up offer to stand out to the seller. Personalizing your offer can make a connection with the sellers. While placing an offer above asking price does stand out, finding something that resonates with the seller can be very effective.
Additionally, as the back-up buyer, keep tabs on the closing timeline. Make yourself aware of the escrow process and where buyer #1 stands. This can help prepare you to pounce if the deal does fall through.
While some back-up offers do come to fruition, it is important to manage your expectations. It can be devastating to go through losing the house a second time. Be realistic and have a back-up plan for yourself. Look at other properties and be ready to seal the deal on your #2 option if this one doesn’t happen.
If a deal does fall through, don’t assume you’re in the clear. Often times, when the first offer falls apart, it’s because of a home inspection issue that pushed the buyers away such as a faulty foundation or leak ing roof. Upon discovering what issues drove the last buyers out of the deal, you may no longer want to own that property. Always be sure to find out why the deal fell through to protect yourself from hopping on a sinking ship.
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