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.