What Is A Back Up Offer And What Does It Mean For Me

WHAT IS A BACK UP OFFER AND WHAT DOES IT MEAN FOR ME

A back up offer is an offer in second place behind an accepted contract on a home for sale. We do accept back up offers for homes for sale in the Phoenix area. A back up offer isn't necessarily the second best offer although it can be. We do see back up offers as the offer that got there next, just like getting second place in a foot race.

In real Phoenix real estate life, here is when we see backup offers: We occasionally run into a situation where our clients fall in love with a home and aren't able to come up with the winning contract during the offer negotiation. This can happen for a variety of reasons - one being that there was another offer that could jump up in price, speed of closing or has the cash for their own closing costs. There are a number of moving factors when putting together an offer for a buyer and while a buyer wants the best deal for them, a Seller wants the highest price within their perfect time frame. In today's market, the well priced and well cared for homes do have multiple offers. Chances are that if a home is your favorite, it's probably somebody else's favorite too!

Don't worry, all is not lost for the second buyer! There is an option to keep your offer as a back up offer to that first or best buyer in case that contract falls through. We see about a 20-30% drop rate for the original buyer in which case, that back up offer and second buyer could end up with the house they wanted! The second buyer can continue to look at homes to find a home in which they can submit the winning offer! If the second buyer does in fact find a home and go under contract with a winning offer, that buyer will want to go back to that first property and rescind their offer. If they haven't been able to find and secure another home and that original buyer cancels the contract, the listing agent will call the second buyer and make sure they are still interested before drawing up an addendum to move forward with the second buyer.

What are the reasons a buyer would cancel a contract? Great question! We get this one all the time when homes come back on the market. Buyers can cancel for a wide variety of reasons. Some relating to the condition of the property, the location, researching schools, trying the commute, measuring rooms, investigating costs further, appraisals, a buyers inability to qualify for a loan, changes in personal circumstances like a death, divorce, job change, children, etc. If a home comes back on the market, it doesn't necessarily mean it was a disaster at the inspection. You can always ask questions and make sure to have your own independent inspection performed and discuss the findings. Your standards and knowledge are probably very different from the previous buyer.

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