Good info  It seams more and more I can't get into a house to show it...Sellers are missing out!

It's great to have a back up offer all ready to go becasue it puts pressure on the first buyers to perform.  It is a good move to keep your home available to keep the action on the listing rolling.

Great advice Adam. In any market having a back-up-offer is like a safety net. It won't hurt anyone to receive back-up-offers and I highly recommend them to all my clients.

Adam do you all have a status in the MLS, for when a home is under contract but you still want showings? We have one here CTS ( continue to show). We passed that rule when if the listing wasn't active it went off r dot com, many years ago. It keeps them active but still stays out in cyberspace.

But, and it is a big but...most Realtors don't end up showing them. 

Great post, I will be showing it to those sellers that may need it!  Thanks

I don't write back-up offers.  It's an invitation to disappointment.  I make sure my buyer gets their loan commitment as quickly as possible.  We want to settle.  Most contracts that fall apart do so because neither the listing nor selling agent properly prepares the buyer and seller for quality financing. 

Adam, I keep on showing until there is bank commitment but unfortunately we must report the property CTS which makes many agents shy away.

If the house isn't showin', the sign's goin'!

In my market we have 3 days to make MLS status changes.  Once the OPT (Option/Inspection Period) is noted on MLS, showings grind to a screeching halt.  Too much inventory available to mess around with a property under contract.

Adam-your advise is sound- the best offer is not always the highest!  Here in Southern California, we don't use attorneys, but rather the third party escrow- but contracts should always be signed  quickly.

This is a tough market for a buyer's agent to make a back up offer.  Firstly, between the time that the first offer falls out of escrow, the market may have dropped.  Just about everytime I have seen a property BOM (Back on Market) within a couple of weeks, the price has dropped!  Plus, a back up offer often makes the first buyer want it more.  Like a kid with a toy, doesn't want the toy until the sibling picks it up. The exceoption to that may be a short sale, when the bank continues to look at all offers, it seems like for months!!

I am going to echo what Carol just said Adam.  The line that jumped out to me was the very same.  Highest price does not always constitute the best offer.  As a buyer, I can go write any number I want on a piece of paper, but if I can't demonstrate my ability to produce those funds, it's irrelevent.  When I sold a personal home of mine several years ago, it was amidst a frenzied market.  I ended up accepting the second highest price of four offers.  The first was a long distance investor who wanted to buy it it sight unseen with 100% financing.  Now in a slower market, I would have done more due dilligence into their qualifications.  But with other offers on the table from more motivated buyers (had seen the property, and were purchasing for personal use) who had substantial down payment funds, I knew the smart move was to go with the party who was emotionally invested in the transaction and more likely to obtain financing.  This was an exceptional post all the way through, my friend.

I just put one of my listings under contract and discussed this same thing with the seller.  BUT, you have to be prepared for the fact that 99% of the agents won't show the home once they know there is an accepted offer, even if it is contingent on inspections and financing.  Double edged sword, especially in this market where there is so much else to choose from.  That said, you are doing a great job of informing seller of ALL of their options, since in the end, it's their personal choice whether or not to continue with showings.

Last year I had a listing that was under contract quickly.  Home inspection was done, we were moving forward to settlement.  I received a phone call from another agent who asked if he could show the home because his clients saw the virtual tour.  I, of course, told him it was under contract but he was welcome to show it - I would set up the appointment.  The first buyer backed out of the contract because of financing.  The agent who showed it under contract wrote and we settled.  That doesn't happen often, but I think there would be hell to pay if dont continue to show the house until settlement if asked!

Great post Adam! I think it is always a good idea to entertain that the highest isnt always the best as you said. It is really who is the best qualified.

Susan

HI EVERYONE:  There seems to be a general consensus as to the points of this post, so I'd like to address them all together instead of saying the same thing a number of times.

First of all, this post makes more sense for Long Island than for any other place that I know of.  Our market is truly unique, but NOT in the good way.  Agents do not do their own contracts here.  The buyers sign an offer sheet that is called a binder, which is an ironic term since it is actually non-binding.  I found this out by talking to the NYS Dept. Of State directly.  So we bascially make verbal offers in writing that cannot be enforced.  When I call an offer and they tell me "1st accepted, no more shows," these homeowners have decided to stop showing their home because they've made a verbal commitment.  Amazing right?

Like many of you, I am less likely to show homes that I consider to be off the market.  In a hot market, just hearing 1st accepted was enough to keep me moving.  However, I've seen that deals are falling apart even before they get to the contract stage, so I'm willing to show the homes if they are in the area that I'm traveling to anyway.

Our MLS has no place to indicate CTS (continue to show).  In fact, we have no place to even indicate that there is a 1st accepted offer, or half in contract.  Until both parties have signed the contract, it remains listed on MLS as available.  The buyers can still see it on the consumer site MLSLI.com, and often times ask to see the homes.

Homeowners are not always rationale, and often times they take the highest offer even if the buyer is not qualified.  While they're doing the dance with the unqualified buyer, the market may continue to soften, and they lose out on having a number of other buyers see the home.  Now, if the home is a generic cookie cutter home, people will just want to move on.  However, some of the homes that I'm speaking about are more unique, and probably could continue to get showings.

Here's the other reason to keep showing.  If you are a homeowner, and you have not signed the contract, you can still accept someone else's offer if it's better.  It doesn't happen often, but it could.  Why shut the doors and take away the potential of a better offer coming in.  Buyers, especially in this market, often times get cold feet or buyer's remorse.  If I've called to see a home, and they've told me "no more shows," I've moved on.  If the first buyer pulls out, the agent has no way to get in contact with me because he or she doesn't know that I've been told by their office that there are "no more shows."

Thank you all for your comments.  I hope that this has provided some clarification as to why I feel that sellers should continue to show their home until they are in contract.  Once the contracts are signed, it's not likely that any other agent would show the home anyway because it comes up on our MLS as unavailable.

Good post. Once the house is under contract we have to report it in mls and the reason is active with contract. This reduces the number of showings.

At this point the qualifications of the buyer can become as important as the offer price. I just had a situation this past week where we had two offers on a property. Buyer A had 50% down and sterling credit. Buyer B had good credit as well but only 10% down. Buyer B offered 5k more. The seller chose Buyer A because of how good the potential to close was. 5k was not worth it to them.

The best offer is the one that can make it to the closing table! Well written post, Adam.

Adam,

You put your heart into your posts! Great information, I do REO properties and while we rarely have an official back-up contract, we keep several buyers "in line" in case the first contract fails to close.

Adam... you make some excellent points.  One big one is that we are getting somewhat back to normal when it comes to mortgages. Sure, stated loans need more down and higher credit scores.... but so did these same programs 4 years ago.  Yes, credit scores are higher on the conventional new loan amounts.  But overall, I see FHA loans to be the end to all on more properties and scenarios than many are willing to admit. Maybe more so, because they don't know what they need to know on the new FHA loan limits. Not sure what your max FHA limit is, but I can go down to a 580 on these new loan limits.  Most lenders can only go down to 620 on these. And just a FYI... I can now do NY.   In any case, again, some good awareness for the public, because that damn media can put the wrong twist on today's market.

Adam,

  This is exactly on the mark...Good article.

Extremely well written post Adam ! You have hit the nail on the head once again ! I am really surprised this didn't get a localism feature !

How did this not get featured????  Oh wait...you probably already exceeded your limit on featured posts for the month...you should've waited til the 1st for this. :)  Hugs! :)