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Several times houses I've liked and was considering (just a day or two) to make an offer on, got an offer before I decided. (Yes, I know...you snooze, you lose.) Agents have asked if I want to do a backup offer. So far, I've declined. I don't see the point. That would tie me up, in case I want to buy another house that comes on the market. Agents say...you'll be first in line to get the house, though, should the deal fall through. But in my mind, the buyer knowing there's a backup offer would push him all the more to complete the deal. Say, if the buyer was having remorse and thinking of backing out because of inspection results or whatever. Human nature being what it is, people seem to want something all the more, if they know someone else wants it. Also, the buyer would know that he couldn't push the seller more on details like repairs, since he knows the seller has that backup offer.
I was thinking it would be better to pounce, should the deal cave. From a buyer's perspective. I totally get why it's great for the seller.
As for the amount, I've read it's best to offer more than you were thinking. I don't see the point in that. I would just offer what I was going to offer to begin with. I won't know what the current buyer's offer is, so I can't base it on that.
First of all, a Buyer may not know whether or not there is a backup offer. It does put the Seller in the better position of being able to be firm on negotiations. So if a Buyer demands a reduction in price, based upon inspection results, a Seller may stay put realizing that a backup offer is in hand.
If you feel that a house is worthy of purchase, feel free to put in a backup offer. If you find another house in the interim, you can simply rescind your offer. (There may be rare instances when you could be locked in for a certain time period, but don't get into a contract with any such provisions.)
I reckon 90% of "backup" offers are because of contingency clauses in today's market. Contingency mainly being buyer needs to sell their own home or other financial matters.
Being the backup offer will allow a seller who is getting frustrated with delays or complications in the #1 offer a life boat. Your offer can enable the seller to bump the bad deal instead of sticking with it.
They can't do that if they don't know you're there. So that makes it better for you to go ahead and submit the backup offer in case #1 turns sour.
First of all, a Buyer may not know whether or not there is a backup offer. It does put the Seller in the better position of being able to be firm on negotiations. So if a Buyer demands a reduction in price, based upon inspection results, a Seller may stay put realizing that a backup offer is in hand.
If you feel that a house is worthy of purchase, feel free to put in a backup offer. If you find another house in the interim, you can simply rescind your offer. (There may be rare instances when you could be locked in for a certain time period, but don't get into a contract with any such provisions.)
I see. I guess I don't understand this backup offer process. I thought I would be tied up with no way out for 30 days. My agent implied that. She said something like, "There's an option period of 10 days, and then buyer #1 would have until I think the end of the month to complete the process." I told her, "Well, I'm hoping to buy before then. I don't want to get tied up on hold." She then said something like, "Well, maybe we could word it so that....." (I forget the end of the sentence)
Thanks. I need to ask more questions about this process.
It's all about how the contract is written. We have backup offer forms, and there is flexibility in terms. There are many ways to cancel, so buyers usually continue to look.
I had a buyer choose to do a backup and buyer #1 cancelled a week later. My buyer was thrilled to get the house.
I did a backup offer on the house I currently own. The No. 1 buyer was taking way too long to come to closing, and the sellers had already built another house. In the meantime, though, I still looked at other houses and even made an offer on another one. Fortunately, the sellers finally got a release from the No. 1 buyer after they blew through the closing date (!), and I went on to buy the house.
I've known of two and three back ups. Sometimes a backup wants to get out of line so the next one moves up. #2 might want out so #3 becomes #2. I've seen #2 backup (that would be second after the primary contract) get the house.
Be sure to read your contract. Why did you think it was a major commitment?
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