What is a backup offer and what purpose does it serve in this exuberant Denver Real Estate Market?
A backup offer is a second place offer. The home is already under contract with Buyer 1, but Buyer 2 submits a contract to the seller. When the seller signs the backup contract, it means that, if Buyer 1’s contract terminates for any reason, Buyer 2 will likely go under contract to buy the home.
1. Submitting a backup offer is never a waste of time.
Submit a backup offer and if the seller accepts it, then you’re next in line. Some experts say that submitting a backup offer motivates the primary offer to close the deal on the house. Sometimes this is true, and sometimes it causes them to back out faster. You cannot control what a seller does with your backup offer. You submit it to put a claim on it and prevent it from going back on the market if the primary deal does fall through.
2. Backup offers are legally binding contracts.
Make sure you are fully ready to pay the amount you agreed upon, and that the home itself is exactly what you want. Once the primary offer falls through, your contract could become a binding contract.
3. If the primary deal collapses, you’re in contract without competition or renegotiation.
The beautiful part of a backup offer is that you could eliminate the competition factor. Once your offer is accepted as a backup, you are in line to buy the house. You may be unable to renegotiate any terms, so it is wise to include contingencies on the contract that protect your interests. One of our team members will be able to advise you on the best contingencies to include in your backup offer.
4. Keep searching even if your backup offer is accepted.
A backup offer isn’t an active contract until the primary offer falls through. Don’t make the mistake of waiting around for a primary offer to collapse or go through before you get back into your home search.
5. The odds are greater when short sales are involved.
If you are buying in an area that has a number of short sales on the market, there is a strong possibility that the first offer will fall through. Many buyers don’t want to wait for short sale approval, so the odds are high that the first buyer may not wait for short sale approval.
For more helpful tips, be sure to follow us on Pinterest.