What is a back-up offer?
When a seller accepts and signs a buyer’s purchase offer, the first accepted offer becomes the primary contract. From that point on, all other offers are referred to as “back-up offers.” Back-up offers are frequently submitted when buyers are anxious to pursue a specific property.
Submitting a back-up offer is a good idea because contracts often fall apart over inspection and financing issues. If you are extremely interested in a property, submit a back-up offer, because your chances of obtaining the property may be better than you think.
When submitting a back-up offer, carefully review, present and negotiate all terms of your offer with the seller. Somewhere in your offer, clearly indicate that your offer is a “back-up offer.” To make sure your interests are properly protected, you may wish to consult an attorney. You will still be able to view other properties, but if you decide to put a bid on another property, you will need to properly withdraw your back-up offer and ask the seller to return your earnest money deposit.
If the primary buyer’s contract fails to close, the buyer and seller will need to sign a contract release. Following the signed release, the seller must notify you that your back-up offer is now the primary contract. From this point on you will need to proceed per your contract terms.
Note: You should always try to find out why the primary contract failed. It may have been due to an inspection issue. If this is the case, try to obtain a copy of the first buyer’s inspection report to make sure you and the seller do not waste more time and money over an inspection concern.