Buyer Question: What Does It Mean to be a "Backup Offer"?
Buyer question: I called to see a home and was told that the seller is accepting backup offers. What does this mean?
There are several reasons that a seller may be willing to continue to show their home after an offer is accepted.
1. The accepted offer is contingent on financing through FHA or VA. This means that there could be additional inspections and repairs required of the seller in order for the buyers to obtain financing. The seller may be thinking that they could get a conventional offer that will not have these repairs required.
2. The accepted offer is contingent on inspections. The seller may be nervous about what the buyers may find and based on the agreed upon price, the seller may not want to make the repairs requested.
3. The property is vacant or it has only been on the market for a couple of days so the listing agent has left the property on the market to pressure the accepted buyers to move forward. Meaning that if there is another offer accepted as a backup, the sellers can say no to any requests by the first buyer and cancel their contract to move forward with the second buyers.
Are there advantages to being a backup offer? That depends on your situation. You are late to the party. But if you really love the home, and you are willing to wait for the 10 day inspection period, it might be worth it! After all, if the first buyers have issues with their financing or if there are too many requests upon inspection, the house could be yours!
But don't get your hopes up! The seller and the listing agent may just be using you and your offer as leverage to encourage the first buyers to move forward. That has happened to several buyers that I have represented over the years.
If you are looking to purchase a home this Spring in the Cedar Rapids/Iowa City Corridor, give me a call to set up a free homebuyer consultation. I would love to assist you!