Welcome to the latest episode of “What’s Working Now!”
I’m recording live from 4550 Klingle Street NW in Wesley Heights. Today, I want to discuss the value of backup contracts for both buyers and sellers.
First of all, what is a backup contract?
Let’s say you have accepted an offer from a buyer already but there is another buyer who wanted the house. Maybe they were too late to make an offer or they lost out in a multiple offer situation. This buyer can write a backup offer.
Basically, the backup offer says that if the first buyer backs out, you will agree to be the buyer at this price and these terms.
How does the backup offer benefit you as a seller?
Let’s say you have a buyer already. They do the home inspection and decide not to purchase the house after all and get a release signed. If you have a backup offer in place, then you can automatically start working with that buyer. You don’t have to put the home back on the market and spend time advertising the property again—you just move on to the next buyer.
How does the backup offer benefit you as a buyer?
If you really want this house but it already went under contract, you can submit a backup offer in case the deal falls through. Without a backup offer, the house will go back on the market and advertised to more buyers, which gives you more competition. You may lose the house a second time if you wait for it to come back on the market.
If you submit a backup offer and the deal falls through, then the house will automatically go to you.
You may also end up paying less for the property. Let’s say you didn’t get the house in the first place due to multiple offers. You had to escalate your price and you still lost. As a backup offer, you might have a different contract at a different price.
Whether you are buying or selling a home, make sure that you work with an agent who understands the value of the backup contract.
You can learn more about the value of getting your home market ready by watching the Home Seller Half Hour this week. Sign up here to learn everything you need to know about selling your home in less than 30 minutes.
Thank you for watching “What’s Working Now!” Be on the lookout for our next video, where I’ll go over some of the coolest things happening in our local market.
If you have any other questions about real estate in the meantime, please don’t hesitate to reach out to me by phone or email. I would be happy to help you!