Does Your Agent Understand the Advantage of a Back Up Offer?

By
Real Estate Agent with Long and Foster Real Estate VA License # 0225089470

Does Your Agent Understand the Advantage of a Back Up Offer?

 

 

Not every real estate agent in the Bristow-Gainesville marketplace understands the value in being a ratified back up offer.  That goes for both listing and buyer agents.  The sad thing is that whenever there is a real estate agent with a lack of knowledge, there is a client that is paying the price.

When a buyer enters into a ratified back up contract, they are not obligated to stop looking for another home.  They are usually not even obligated to put any money into the transaction.  Being a ratified back up contract means on that, when and if the first contract on the home they were interested in falls through, they are legally notified and slide into the position of being the next ratified buyers.  The buyers only responsibility, through their agent of course, is to give notice if they get under contract as a primary buyer on another property and would, therefore, be unable to perform as a back up buyer.  Whew!  That sounds easy, doesn't it?

Time and again, when offered to be a ratified back up offer, buyer's agents will tell me that they "don't want to tie their buyers up waiting in case something falls through on the first deal."  What about what I described in the preceding paragraph sounds like any buyer would be "tied up?"

Instead, buyer agents beg to be notified if something goes wrong with the first contract.   The only way you are ever going to be notified if something goes wrong with the first contract, for absolute certainty and have 100% claim to the home as the next buyer up, would be as a back up offer.

Listing agents also don't give much thought to back up offers in a seller's markets when buyers are falling all over themselves for a chance to be the winning bid on a property.  Back up offers are powerful.  Particularly in Northern Virginia where our sellers have to do only two types of repairs to a home contractually:  1) they need to correct HOA violations and 2) the smoke detectors must be in working order.  The answer to any other repair request can absolutely be NO.  And if a seller has a ratified back up offer, they are less likely to get pushed around during repair requests.

In short, there is no one a legitimate, ratified back up contract doesn't benefit.  If you want to buy it and would like to be notified if it is available, ask to be a ratified back up.  If you are a seller that wants the true leverage of the seller's market, hold an offer as a back up.  

 

Comments (24)

Doug Dawes
Keller Williams Realty Evolution - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

That's how our second son got his first home Chris Ann Cleland.

We explained to the agent we were disappointed about not being picked but he should consider the offer to be a back-up offer in case the 1st buyer backed out. I had learned that many agents don't do this because they think it ties up the buyer, which it doesn't

Nov 28, 2020 02:11 PM
Anna Banana Kruchten CRS, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Back up offers make total sense.  It's a win -win and buyers can walk with no consequences if they find another home.  They're quite common in my area.

Great post Chris Ann Cleland !

Nov 28, 2020 02:42 PM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Chris Ann - there is needless confusion about back-up offers.  Truly understanding the potential opportunity is worthwhile to all parties.  

Nov 28, 2020 02:44 PM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Doug Dawes --See!  In my career, there have probably been a dozen or so that have gone to back up offers, not including Short Sale Listings.

Nov 28, 2020 02:53 PM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Anna Banana Kruchten CRS CRB, Phoenix Broker --The good agents here know all about them.  It's funny that some think being a back up is just being told, "We'll keep you in mind."

Nov 28, 2020 02:53 PM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Michael Jacobs --As is true in many instances, just reading the language in the contract makes it simple to understand.  Reading is fundamental.

Nov 28, 2020 02:54 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

Two months ago I made an offer on a piece of property. I never heard back from the listing broker. So I called him and he told me that he had a verbal accepted offer. I asked him if we could put in a backup offer, but he said no, my seller is not interested in any backup offers. It was funny because our backup offer was $10,000 over their original offer, it turned out he was representing both sides of the transaction, go figure. 

Happy Saturday afternoon Chris Ann Cleland 

Nov 28, 2020 04:37 PM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Chris Ann Cleland This listing agent does know the value of a backup offer. I do not see a downside to accepting one!

Nov 28, 2020 05:26 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Nov 29, 2020 01:03 AM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Having a knowledgeable agent is definitely beneficial, I have lost count of how many agents I have worked with on the other side that didn't know what they were doing and thus my clients got the better end of the deal.

Nov 29, 2020 05:43 AM
Barbara Michaluk
Weichert Realtors | Phone Direct 240-506-2434 | 301-681-0550 office - Silver Spring, MD
Leisure World Specialist / Full Service REALTOR

Back up offers make good sense for buyers who want to set themselves up to be chosen in the event the first contract doesn't work out.  They can continue to look for something else.

Nov 29, 2020 07:16 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Paul S. Henderson, REALTOR®, CRS --That stinks, but sadly, one agent putting their own interests first is one agent too many.  And there's at least one in every market.

Nov 29, 2020 09:11 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Margaret Rome Baltimore 410-530-2400 --Do you find buyer agents not understanding how they work and having a misconception about the commitment?

Nov 29, 2020 09:12 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Richard Weeks --Thanks.  Hope you have a great week too.

Brian England --We are only as good as what we know and understand.  The contract is just basic.  And this clause is one or two paragraphs to learn.

Nov 29, 2020 09:13 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Barbara Michaluk --Not surprised you know how they work.  

Nov 29, 2020 09:14 AM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Yes, such an overlooked advantage Chris Ann Cleland being a back up offer can lead to a huge opportunity

Nov 29, 2020 09:49 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Chris Ann Cleland Just did part of my radio show on back up offers.

Nov 29, 2020 10:09 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Rocky Dickerson --With very little actual commitment.  Just the commitment to keep the listing side posted if you find another home.

 

Nov 29, 2020 11:02 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Back up offers can add a layer of assurance to the seller.  I'm shaking my head at comment #11, left by Paul S. Henderson, REALTOR®, CRS .  I've been in that situation, and it doesn't smell right to have it happen!

Nov 29, 2020 04:15 PM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Myrl Jeffcoat --I think we've all been in that situation and it stinks.

Nov 29, 2020 08:33 PM