ORANGE COUNTY CA HOME BUYERS CONFUSED BY REAL ESTATE LISTINGS IN BACK UP STATUS
What does it mean when a real estate listing is in Back Up status? This is question that I continually receive. It seems that Orange County, California home buyers are confused by the term Back Up status, and how it differs from Pending status. Below, I explain what Back Up status means, and why it's important to you, if you're interested in a home that's currently listed in this category.
THE DIFFERENCE BETWEEN BACK UP AND PENDING REAL ESTATE SALES
When a real estate listing is placed in either Back Up status or Pending status, that means that the owner has accepted an offer on the property, and escrow has been opened to complete the sale. However, there is one key difference between a property in Back Up status versus a property in Pending status:
A property in Back Up status is typically still available to visit, and the owner will continue to accept offers, as a back-up, should the first, accepted offer be cancelled for any reason. On rare occasion, the owner does not wish to show the property any longer, and asks that potential buyers drive by only, and place a back up offer if they're still interested.
A property that's listed in Pending status is no longer available for viewings, and the owner is no longer accepting additional offers.
WHY A HOMEOWNER WOULD LIST A PROPERTY BE IN BACK UP STATUS VERSUS PENDING STATUS
A homeowner and their agent may choose to place an Orange County property in Back Up status if the offer that the owner has accepted is not a sure thing. Because of these ever increasing number of unexpected pitfalls involved in real estate transactions, agents are more reluctant to take a home completely off the market, and leave the homeowner without a plan B in place. Quite often, Orange County real estate agents will leave a property in Back Up status until all loan, appraisal, and other contingencies have been removed, and they're fairly certain that escrow is going to close.
CAN A HOMEOWNER CANCEL A SALES CONTRACT IF THEY RECEIVE A BETTER BACK UP OFFER?
What if the homeowner gets a better offer while their Orange County home is in Back Up status, and decides to cancel the original contract? This is another question that I frequently hear, and the answer is that the homeowner cannot cancel a binding, written contract, unless the original home buyer fails to perform, as stipulated in the contract. In short, this means that the homeowner is stuck with the offer that they agreed to, unless the buyer does not hold up their end of the bargain or cancels the real estate sale, as allowed under the contract terms.
WHAT ARE THE CHANCES THAT THE SALE WILL FALL THROUGH?
The next question that I invariably receive is, "what are the chances that the sale will fall through and they'll consider one of the back-up offers?". Now, if you asked me this question 10 years ago, I would have told you that the chances were slim to none. Today, it's a much different story; with today's tough lending guidelines, which seem more like a mine field at times, anything is possible and I have seen many a home fall out of escrow in the 11th hour. Another reason for a large fall out rate is the fact that short sales take sooooo long to complete. It's not uncommon for a buyer to become impatient or find another property that they like more, and walk away from a never ending short sale transaction. When this occurs, the back-up offers are usually reviewed, and the agents that made them are contacted to find out if their buyers are still in the market and interested. Even all cash offers can and do fall out of escrow and fail to close as originally agreed.
As you can see, if you fall in love with an Orange County, California home in Back Up status, it may be worth your time and effort to take a look at it and place a back-up offer, just in case.