Backup status confuses most home buyers and many untrained agents.

The status of "Backup" was created as a way to let the public know that while the home is still under contract by another buyer, they have reason to believe that the current escrow may fall through for any number of reasons.  This allows a backup offer to be submitted subject to the current escrow being cancelled.  The backup buyer is kind of like a relief pitcher in baseball, there just to take over in the case the starting pitcher (original buyer) can't complete the game as planned.

While the paragraph above was fairly accurate several years ago, it is far from the truth now.

Buyers everywhere must be aware of the false Backup status in today's market.  This phenomenon is created by a shortcoming with local MLS systems whereas the MLS removes all internet advertising for those sales placed in "Pending" status.  An example of this might be a home listed as "Active" receives an acceptable offer... the listing agent then changes the status to Pending to indicate to the public that the home is under contract and scheduled to close soon.  Once the MLS sees the change to Pending status, they remove the listing from the live feed that is released to all the partner (syndicate) websites.  This means no more calls to the listing agent from interested buyers (which many agents must have to survive). 

As a workaround (and here's where the Backup status comes in), the listing agent, rather than placing the home as pending status, will place the home in Backup status (the MLS allows homes in Backup status to remain on the live feed which goes out to the internet) which allows buyer calls to keep coming in.  The listing agent then simply tells the buyer that the home is in escrow, "but I've got a few more available just like it".

If you're a buyer and you see a home listed as Backup, ask questions first, write offers only after receiving confirmation that the sale is actually in distress!

A great agent can really help you to navigate through this complex transaction.

Good luck out there!