Backup Offer – Powerful Single Page Document
The backup offer is a powerful, single page document. It gives a seller confidence in their selection of offers. And, it could win a lucky backup buyer the home of their dreams.
Cloverdale has joined the ranks of quick home sale turnover in Sonoma County. Well priced homes go into escrow fast, often within 2 to 3 days. If a buyer missed out, perhaps the right solution is to write a backup offer and hope for first position.
What is a Backup Offer?
A backup offer is a tool that California real estate professionals use to position their clients to be next in line for a successful closing. When a home goes into contract, it is expected that the buyer will buy the house and a sold transaction will ensue. However, for many reasons, that closing may not happen.
Both the seller’s agent, known as the listing agent, and the buyer’s agent can empower their clients greatly with this amazing instrument.
Why backup offers are great for sellers:
First, a backup offer strengthens the seller’s outlook. This mighty document can provide peace of mind to the seller regarding their choice of offers. If something happens to the first buyer, there is another buyer ready to close.
Understandably, sellers often feel most vulnerable during the first few weeks of going into contract with a buyer. Questions arise for the sellers. Will the buyer move forward after inspections? Will the home have the value the lender needs to provide the money? Will the buyer ask for concessions? These kinds of questions can be unnerving for sellers.
Second, the backup offer can shorten the timeline for the seller. Oftentimes, sellers are on a tight timeline. A backup offer can eliminate the need to put the house back on the market if the current buyer cancels. Seamlessly, the next buyer slips right in. The closing timeline can be very quick, especially with good communication between agents.
Third, a backup offer can stabilize mid-contract negotiations. Often, the seller’s position prior to accepting an offer is quite strong. Strategically positioned, some buyers win the initial contract, with the intention to renegotiate terms during the investigation timeline, after the competition has fallen away.
Meanwhile, the seller expects the buyer to remove all contingencies within two to three weeks. Instead, the buyer’s agent delivers a request for a $20,000 price reduction.
With a backup offer in place, the seller’s agent can remind the buyer’s agent that the seller has a strong backup offer. This position of strength could help the buyer see they need to perform with their originally offered terms if they want the home.
Why backup offers are great for buyers:
If all of these benefits seemingly go to the seller, why would the backup buyer want to give the seller that kind of power? Here is one reason, and it’s a good one. A backup offer can eliminate future competition for the buyer if the original buyer cancels. If a buyer has a signed backup offer and is in first position, their chance of having to reenter a multiple offer situation during the terms of their backup offer is completely eliminated . Not maybe eliminated. Not possibly eliminated. Absolutely eliminated. The house doesn’t go back on the market because the buyer has a signed backup offer putting them into contract when the other contract cancels.
Backup position is a VERY powerful and effective position to hold. If you are lucky enough to win backup position number one, be happy, because you may just end up owning that home!
Call if You Have Questions Regarding a Backup Offer
If you would like more information on Backup Offers or anything else housing related, please feel free to reach out.
Best of luck!
Anne Miserlian Baker of
Miserlian Baker Real Estate
Real Estate Sales &