I think I have explained the term "Backup" more over the last few months than ever before. I have a few buyers that are determined to be in specific neighborhoods, in which the inventory has been dwindling since the beginning of the year. We see a new listing come on the market, get out there that day and find that offers have already been placed! Within days, we are notified that our "great" offer has been placed in Backup. Well, considering we came in very, very close (and in fact, one time slightly above ) to list price, how high was that offer over "great"?
But, oh well, we get on with it and keep looking......we now place offers on new listings and on listings that have already been placed into "Backup", for that chance to be the offer chosen eventually. So, I now have clients with a total of 10 offers in backup. "Backup"? What does that mean? I explain, very patiently over and over, Backup means that an offer that was submitted has been accepted by the sellers but - in the case of a standard sale - the agent is keeping a few other good offers in backup in case the buyer walks away (or finds problems in the inspection, or cannot get a loan, etc) during the 17 day contingency time period so that she/he has another good offer for the seller to entertain selling to. In terms of a Short Sale, it means that a better offer (one that may be higher, may not be asking for closing costs, may have better financing in place, etc) has been accepted by the seller and sent to the lender for short sale approval. This agent then keeps all the other offers received in "Backup" also for the same reasons but also for the fact that during this VERY long time period of lender approval/disapproval, many prospective buyers find another home that they loved and had an offer accepted, or things may have changed and the buyers may not be able to buy at this time. In fact, on on of my short sale listings that took almost 3 years, we went thru 27 buyers the first time around, 22 the 2nd and 10 the 3rd, until one buyer just hung in there and got this great home. Ok, great, we understand!!!
uh-huh, I see how much you understood when I hear "ok, now, how much higher do I need to go on my offer to get the seller to accept it?" "We've been in backup on this home for a few days, has the seller accepted our offer?". We very patiently go over what "Backup" means......."ok, great, NOW I really understand"... Then, "can you find out what the highest offer is so that if I come in higher I can get the home?"............let's get on with it, my nice buyers, and find a home, place that "great" offer the first time, and have your offer be the one accepted by the seller. You just may get that lucky call 17 days to months down the line that one of your many backup offers is now in place for approval!