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Back-up Offers, a Wonderful Addition to our Arsenal

I've been using back up offers for many years. Almost without fail, the other agent in the deal is not familiar with this wonderful tool. How many of you are using back up offers in your Real Estate practice?

Just what is a back up offer? When you have a desirable property and more than one offer, the Seller has to choose the best one. What happens to offer nr. 2?

If the Buyer's Agent is savvy, offer nr. 2 will become a back-up offer. If, for some reason, offer nr. 1. falls out, Buyer nr. 2 steps in and buys the property for the already negotiated price and terms.

Do any deals fall out these days? Does the bear... Never mind! Why not have contract nr. 2 in place, just in case? I've closed a lot of deals this way. As a listing agent, I always recommend this route when we have more than one offer. As a Buyer Agent, I always use this route also, if by chance I lose the deal to another buyer (not likely). The way I write the back up addendum, my Buyer client can exit the deal at any time prior to being moved into the primary position. That way, we can still keep looking, but have the back up offer in place, just in case the primary buyer can not close on the deal. This works like a charm.

How many of you have successfully employed the Back-up Offer solution?

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Posted by Myrtle Beach Real Estate by Mirela Monte on 11/21/2008 07:38 PM

Comments (9)

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Originally posted at: Myrtle Beach Real Estate by Mirela : Back-up Offers, a Wonderful Addition to our Arsenal

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9 Comments on Back-up Offers, a Wonderful Addition to our Arsenal

NOV

2008

I would really like to hear from you on this!

Have you ever employed the back up offer?

If so, how well did it work for you?

Do you have any advice regarding this method?

That's a practice I've never heard of in this area, but then again we haven't been getting too many multiple offers in the two years since I entered the business. But what a fantastic idea!! I'll be interested to see the other comments about this.

We have never done that in Metro Detroit. I wonder if our agents would go along with it.

Russ: Agents here are not using it either, but I am. Once exposed to this method, the agents employ it because it works. The more you know, the more deals you can put together...

Kirsten: I actually had to deal with multiple offers on one of my listings today. Now I have an accepted offer AND a back-up offer, just in case...

Here they are called secondary offers and you are required to indicate it when you write it and the listing agent of course tells the selling agent there is an accepted offer...not used here very often now but with the change of a loss of job....not such a bad idea !

I don't care for back-up offers. If it is my buyer, I certainly don't want him tied up waiting to see if he gets a house. I want him to have one NOW! If it is my listing but not my buyer that's fine. The one time I was sitting comfy with a backup offer with no OUT contingency the first one fell out and the backup had gone on their merry way. The broker had given their earnest money back! I raised ole holey-heck!!

Hi Mirela:

Yes, you are right. We do that in NJ also.

When you have a desired "hot" property and a buyer wants to be in the back-up position and is willing to wait, you right up a "back-up" offer.

I currently have a listing that has a contract on it, however it has a huge contingency with it; that requires a township approval.

The buyer (of course) wouldn't proceed with the township without tieing up the property into a solid agreement, so I suggested to the owners to continue to show the property for "back-up offers"...just in case the first buyer doesn't get the township approval.

No other offers have come in to date, however, the property has been shown.

Have a nice weekend...

We have used back-up offers when the market was hot. In fact we had a matrix for sellers to look at with all the offers they were receiving. Now with so many homes to choose from, buyers are reluctant to put in a back up. They don't want to get their heart set on a house they may not get. Of course it's all in how you present it and loans certainly do fall through these days, so maybe I'll think more about using this again. I also have closed deals on a backup when a buyer really loved a certain house and the first place offer fell through...

I deal with a lot of REO's (for those who read my REO lament a few months back, yes, I did garner that major account!!!) and multiple offers are not that uncommon on good deals, even with the market being what it is.

There is a buyer psychology involved and aside from supply and demand, that certainly plays a role in it all...

Knowing how to "instigate" multiple offers is a whole new blog, one I may write about in the future.

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