Once you start looking for a house you might find that a lot of the places you like will already be under contract by the time you make an offer. That can be very frustrating, but you have some options. One of those is to put in a backup offer. This means that you’ll offer on a home that someone else is already under contract to buy. If the first buyer doesn’t close because the deal falls through, you will then have the chance to buy the house. That can be stressful because the first buyer often gets the house, anyway, but it’s worth a try, especially in a hot market where houses are selling fast. You may not see the importance in putting in a backup offer, but there are several good reasons why you want to consider it carefully. Here are five of those reasons to think about, while you’re looking at homes.
1). What if the inspection is bad?
If you’ve fallen in love with a home and have a backup offer on it, one of the ways you could get the house is through an inspection that the first buyer isn’t happy with. Some sellers will offer to fix problems that were found on inspection, but others won’t be willing to make repairs. If a buyer doesn’t feel they want to buy the house with the issues it has, you may get the opportunity to buy it. With a backup offer in place, you’ll already be ready to move forward on that house, provided the issues found on inspection are acceptable to you. Many home inspections turn out just fine, but especially if you’re buying an older home you may see concerns about systems or structure you weren’t expecting until the inspection took place. Not all of those concerns will be easy or cheap to fix. Still, what may turn one buyer away won’t necessarily turn another buyer away, and that could be how you end up with a house you really love.
2). Will you end up in a bidding war?
In the process of buying a home, one of the problems that could come up is a bidding war. Other potential buyers may love the house you’re trying to buy just as much as you do, and there could be multiple offers on the property. If you have a backup offer accepted, and the first offer falls through, you won’t have to fight through a group of other buyers to get the house you want. If you don’t want to get involved in a bidding war, or you would prefer to pull out of that war at a particular point that you’re comfortable with, you may want to have a backup offer in place. Bidding wars can be very stressful. Some buyers don’t want to get into them at all, and others will place a couple of bids and then drop out if the process continues. If you find yourself with the potential for a bidding war and you don’t want to be a part of it, you can get a backup offer accepted and ease your worries.
3). Is that neighborhood really important to you?
The value you put on the neighborhood is another very important consideration when deciding whether to make a backup offer. If there are several houses in the area that you like, and you’re particular about staying in that neighborhood, you may want to have a backup offer on a house in that area, even if it’s already under contract. Ask your real estate agent about any possible implications of having a backup offer on more than one house, so you don’t find yourself with a financial problem if the contracts of two or more houses fall through. That could become a significant issue, so it’s very important that you make just one backup offer, or that you seek appropriate advice and contract wording if you plan to make more than one.
4). Can the seller back out?
One of the reasons you should make a backup offer is to keep the home available. If the buyer who’s originally trying to purchase the home either decides they aren’t going to or they don’t want to, the seller could potentially take the home off the market or sell it to someone else. With your backup offer, you’ll have the opportunity to buy the home, instead of potentially losing it to someone else. Technically the seller could still back out, but with an accepted backup offer you would have a much ber case for trying to close on the home.
5). Are you willing to wait for the house?
If you decide that a backup offer is right for you, working with your agent can help you get what you need to be successful. When you make a backup offer, though, be aware that you could have to just wait and see what happens. You won’t know if you have a chance to get the house until you see if the first offer falls through. Since that could happen any time up until the closing date, you may be stuck waiting to hear whether your backup offer will come into play or not. Still, if you really love the house and you’re willing to wait, a backup offer can be well worth making.
2 Point Highlight
You may not see the importance in putting in a backup offer, but there are several good reasons why you want to consider it carefully.
If you decide that a backup offer is right for you, working with your agent can help you get what you need to be successful.
