How do backup offers work?

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What is a backup offer?

Backup deals in real estate are great if you’ve found your dream home and don’t want to miss your chance. If the initial offer fails, the accepted backup offer, or second offer, enters directly into the contract.

After all, there are many reasons why houses are not closed. Having a backup offer in place gives you another opportunity to get your hands on the house should it unexpectedly come back on the market.

Conditional contracts are common in the real estate industry. These contingencies may arise and prevent sales from being fully executed. A fallback offer guarantees that you will get a new contract with a seller if the first offer they accepted fails.

You must always deposit money in an escrow account as part of the extension of any backup offer. If the first offer ends successfully, your deposit will be returned to you and you will be released from the terms of your backup offer.

Consult your real estate agent if you need to cancel your backup offer. Backup offers are legally binding documents, so you need to make sure that you stick to the terms of the contract.

How often are backup offers accepted?

Backup offers are accepted when a seller is uncertain whether a property will be closed, especially when they need to unload the house quickly. They are also commonly used in a seller’s market, where sellers hold more power than buyers. They are rare in a buyer’s marketwhen buyers can be more selective.

In general, the more a seller fears an initial deal will close and the more incentive they have to sell their property, the more they want a backup.

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