In today’s tight housing market, well priced homes are selling in just days and in some cases hours. I recently listed a home that had three offers in one day. Multiple offers are much more common today than in the last several days. Multiple offers also mean that someone is not getting the home of their dreams, or does it.
If a home buyer finds the home of their dreams, but it is already under contract or the seller chose to accept another offer, all is not lost. A good real estate broker will present a backup offer on the home the buyer wants. The buyer doesn’t have to put up any money and they put themselves as first in-line if the first deal falls apart.
Most sellers will gladly accept a backup offer. It puts pressure on the current buyer to get the deal done and done quickly. It is also a comfort to the seller to have another offer waiting if the current deal does fall apart. Once a deal is in place, sellers start to emotionally move on. They start to pack. They plan their move. They make future housing arrangements. By the time moving day does come, most sellers have already psychologically moved. If something goes wrong with their transaction, that all comes to an abrupt halt. A backup offer is an easy and attractive way for the seller to keep the ball moving if their first deal falls apart.
Real estate deals fall apart every day. During the inspection period, the current buyers may discover something that makes them change their mind about the house. The seller will now be aware of the issue and maybe very willing to make a deal work with a backup offer. The seller is legally obligated to share any issues that they become aware of with potential buyers. The seller is still motivated to get a deal done quickly and a backup offer can often make that happen.
Tight credit regulations also make it more likely that buyers will not qualify to purchase the home that they want even if they were pre-qualified. When the deal falls apart due to financing, a backup offer is a very appealing thing to the seller. A backup offer can save that day for the seller.
When making a backup offer, there are a few things to consider. A backup offer should contain the right of first refusal. A backup offer should assure the buyer that they are first in line. A backup offer should be pre-negotiated with a set price and timeline for the purchase after the home becomes available again. A backup offer should also have a set expiration date not too far in the future. Thirty days for example. This keeps pressure on the seller to keep the current deal moving along.
So if you miss out on the home of your dreams, don’t sulk. Make a backup offer. As always, use a real estate professional to help you navigate the process.
Rick Yost is a realtor, real estate author, and long-time Windham resident. You can contact Rick with all of your real estate questions and needs at email@example.com.