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  • Alexander Wissel

Backup Offers Can Help You Go From Underdog to Homeowner

Sneaky Buyer Strategies to Win

  • The importance of backup offers in winning real estate transactions – after you’ve lost.

  • How backup offers provide a safety net for buyers and sellers.

  • The advantages of submitting a backup offer when buying a home.

Backup Offers Can Help You - Source:
Backup Offers Can Help You

Do you want to be a ‘backup offer’ is a phrase thrown around to buyers a lot – especially when it’s a competitive market. But home buyers today – both new and old – might want to pay close attention, because it might just get them the home.

We’re going to show you why you might want to be a backup offer and in what circumstances it might sense for you.

A backup offer is an additional offer submitted by a buyer for a property that is already under contract with another buyer. It serves as a secondary option, and will become active if the primary offer falls through.

What is a Backup Offer?

A backup offer serves as a secondary option, ready to step in if the primary offer falls through. Essentially, it's a way to secure your position in case the initial deal doesn't close.

Typically if a home contract falls through the home would go back on the market. The agent would contact the other offers on the property to see if there was still interest. Then the bidding and negotiations would start again.

Why Are Backup Offers Used?

Backup offers provide a safety net for buyers and sellers alike. Sellers typically welcome backup offers because they can help prevent delays in the sale process.

If the primary offer falls through due to financing issues, inspection problems, or other reasons, having a backup offer in place can ensure a smooth transition to the next buyer. This can give a seller a stronger bargaining position when they are negotiating on home repairs.

For buyers, submitting a backup offer allows them to remain in contention for the property they're interested in, increasing their chances of securing the home.

In a competitive market, there is a ‘feeding frenzy’ effect on buyers who are excited to win the bid and get a property. Sometimes they get a little beers remorse if they feel like they overpaid or realized they didn’t want the home after all.

The more competitive the market, the more offers buyers end up putting in on homes that aren’t ‘perfect’ and the more homes can go back on the market. A backup offer is a good way to keep your place in line if you have the ability to be patient.

How Does a Backup Offer Work?

When a seller accepts a backup offer, they essentially create a "backup position" for the buyer. This means that if the initial contract is terminated or canceled for any reason, the seller will be contractually obligated to move forward with the backup offer instead.

The backup offer typically becomes binding once the primary offer is no longer valid. In that case, the new buyers would need to submit their earnest money deposit.

It's important to note that the backup offer does not override the primary contract. Until then, the seller remains legally obligated to the primary buyer. If the primary contract proceeds as planned, the backup offer becomes null and void.

Often you will know within a week or two whether a home contract is moving forward. The two biggest hurdles are the inspection and the appraisal. If there are going to be conflicts or concerns about the home, that’s when they will pop up.

Advantages of Submitting a Backup Offer

Submitting a backup offer can offer a couple of advantages for prospective buyers. By submitting a backup offer, you automatically become a potential buyer should the primary contract fall through. This allows you to stay in the running as you’re still hunting for the perfect home.

When a backup offer is accepted, you’re taking advantage of the price point at the time of your offer. In the past few years of crazy market increases, we did see weeks where prices increased by $10k-$50k in a week for similarly price properties. If you were in that situation and had to re-bid for a home, you’d be paying more if you were trying to beat other buyers, again.

This can be a time saver if it saves you valuable time and effort in finding another suitable property. You can still keep shopping for another home as well. In the event you want to put another offer on a different home, you can pull your backup offer.

Signing a backup offer doesn’t mean it has to stay there forever if you find something else.

Backup Offers for the Win!

Understanding when to use backup offers is important when you’re in the home-buying process. By submitting a backup offer, you increase your chances of securing a property that you're interested in, while providing sellers with a little more security.

It’s important to remember that backup offers are not guarantees you will get the home. But they do offer an opportunity to save a step in if the initial contract falls through. Discuss backup offers with your real estate agent to determine if they are suitable for your situation. Happy home hunting!


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