Should You Accept a Back-Up Offer on Your House?

By
Real Estate Broker/Owner with Rulnick Realty, Inc.

Should you accept a back-up offer on your Destin Florida property, and what is it?

I recently placed one of my Destin listings under contract. It’s a fast market, so the house went “pending” in one day. The offer was great, for cash, with a strong price and a fast closing.  Of course, I had received several inquiries and showings as soon as it was listed. One agent whose buyers didn’t move fast enough, asked if they could put in a “back up offer”.  What does that mean, exactly?

In Florida, you can write an offer for real estate with a “back-up” contingency It says, in a nutshell:

  1. The back-up contract is contingent on the termination of a prior contract.
  2. The back-up contract is effectively withdrawn if the prior contract is not cancelled by a specified date.
  3. The buyer can withdraw the back-up contract at any time prior to notification that the primary contract is terminated.

How does a back-up contract benefit a seller?

A back-up contract obligates you to sell to the secondary buyer should the first offer fail to close. The failure to close could be for various reasons, such as: the buyer cannot get financing, the house does not pass an inspection, the buyer backs out, etc.

But why would you want to be tied in to a second contract? If you are, you will miss any potentially better offer that might come in.  Let’s say, however, that the back-up contract has fantastic terms, like a strong price, cash, and few contingencies. Even then, the back-up buyer can withdraw his offer at any time prior to moving into first position. It’s really an “option” to actually become the primary contract.

So, it just ties you in, and the back-up buyer is in control.  That’s to the buyer’s benefit, and not yours.

 

It’s Wendy… It’s Sold!

Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call 850-259-0422
Email Wendy: itswendy@rulnickrealty.com

This is not construed to be legal advice. For contract questions, consult an attorney. Wendy Rulnick, Broker, lists and sells real estate in Destin, Santa Rosa Beach, 30A, Miramar Beach, Crestview, Sandestin, Seaside, Rosemary Beach, Okaloosa Island, Fort Walton Beach, Niceville, Freeport, Bluewater Bay, Navarre, Florida.

Parlo italiano.

Posted by

"It's Wendy... It's Sold!"

Wendy Rulnick, Broker/Owner Rulnick Realty, Inc.

Call Wendy Rulnick 1-850-259-0422

email itswendy@rulnickrealty.com

www.rulnickrealty.com property searches and community info

Wendy Rulnick helps real estate buyers and sellers on the Emerald Coast of Florida.

Rulnick Realty

 

Comments (6)

Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

A backup offer has possibilities, especially if there are issues with a loan. I have had an agent call me when the offer accepted was not completed properly.

Aug 11, 2021 09:18 AM
Wendy Rulnick

Ed Silva Interesting, different experiences with the back-up!

Aug 11, 2021 09:42 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Wendy, I am a fan of back-up offers both on the listing and buying side.     Many times as a listing agent had to rely on the back-up, and on the buy side - my buyers have been bumped into first position when the first buyer terminated.

Aug 11, 2021 09:31 AM
Wendy Rulnick

Joan Cox  I appreciate your differing opinion. It could be your market. I actually rarely encounter them around my area!

Aug 11, 2021 09:41 AM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Good morning Wendy! I used a back up offer I had to keep the buyers in escrow from getting out of line on repair demands. I let the buyers know if they didn't like it, there were waiting buyers ready to take their place.

Aug 12, 2021 12:06 AM
Wendy Rulnick

Rocky Dickerson Good Morning indeed! I can see that strategy regarding the fear of the backup offer being easy pickings for the seller, to hold that primary buyer in place. I wonder, though, if the primary buyers would also feel less guilty just dropping out, knowing there was a second buyer? 

Aug 12, 2021 06:07 AM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Wendy - real estate is not a game but there are aspects of it that definitely include strategy.  More importantly is the communication that takes place as part of that strategy.  Being and staying in-the-know can help those participating in a transaction to stay informed.  Winning might be one of those benefits.  

Aug 12, 2021 05:26 AM
Wendy Rulnick

Michael Jacobs It definitely can be a game, (which I don't play that way)! I appreciate how someone might use it as a strategy.  The  gamesmanship can change depending on how fast a market it is for the area, and the micromarket of the particular property.

Aug 12, 2021 06:11 AM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I used to think that having a backup offer was a good thing, but in a market as hot as this one, perhaps it would be much better to just open it back up to the market again if the current offer in hand falls through.

Aug 12, 2021 06:06 AM
Wendy Rulnick

Brian England I am with you 100%.  I would not want my seller tied to a finance offer as a back up, if we could throw it on the market again and probably even sell for more!  Different or hard-to-sell property, maybe, but in Florida, the back-up offer is only an "option", the buyer can pull out any time prior to going to first position, so in my opinion, it's a waste of effort. 

Aug 12, 2021 06:15 AM
Roy Kelley
Retired - Gaithersburg, MD

Thank you very much, Wendy, for sharing your experience and your advice.

Keep cool, take care and be safe.

Aug 12, 2021 08:16 AM
Wendy Rulnick

Roy Kelley  you, too!

Aug 12, 2021 08:21 AM