‘Back in the Day’ it was the norm to have multiple offers AND have a couple of Back Up Offers as well. A Back Up Offer is a security blanket for the seller should the first contract fall out. The Back Up Offer will immediately be in place with a contingency that the original contract has a successful sign off of the cancellation.
In Hawaii, we ‘open’ ESCROW (which is an independent third neutral party that takes care of the interests of both buyers and sellers) with an accepted Purchase Contract and initial deposit of the buyer. They take care of the final settlement with the recording of the documents, paying off the existing liens, mortgages and any other expenses to have a successful closing.
The ESCROW Company will also take care of a cancelled transaction and send out cancellation letters to all parties and initiate the Back Up Offer Purchase Contract in escrow and send out the first documents for the Buyer and the Seller. The transaction date starts at that time.
This practice ‘saves’ a lot of headache, time and heartache and held true just a few short weeks ago. A transaction for a listing of mine was in contract and a few days before we left on vacation (with my pushing and shoving for the Conditional Loan Commitment Letter) the loan officer says, “In all good faith, we cannot proceed with the buyer’s loan”. YIKES! You mean the buyer wasn’t qualified after all?
NO PROBLEMO! We immediately initiated our accepted Back Up Offer two days before departure on our vacation. The appraisal is in, survey complete, Termite and Pest Control is scheduled to inspect and give a report, full loan approval and tentative signing is occurring next week.
I’d say that the market is picking up in order to receive back up offers.
I’d say suggesting to the seller to continue showing for back up offers was a positive.
I’d say that a back up offers rock!