Backup Offers
As high school seniors (and their parents) are acutely aware this time of year, colleges have waiting lists.
But so does residential real estate.
It’s just that 
the real estate version is called a “backup offer.”
The usual scenario: a runner-up Buyer is very interested in a property that is now under contract, and wants to be in first place should anything happen to deal #1.
The best way to cement that status is to execute a Purchase Agreement with the Seller that is contingent upon the first deal cancelling.
Should that happen, their deal automatically goes into effect.
Because the “Backup Buyer” will effectively be tied up while the first deal plays out, it’s typical to limit the amount of time their offer is effective.
The most common duration is 7-10 days — enough time for the Inspection Contingency on deal #1 to play out.
Handicapping the Odds
How often do Backup Buyers end up getting the house?
Depending on the size, age, and condition of the house — and the motivation of Buyer #1 — I’d peg the odds at between 10% and 25%.
But that understates the role the Seller has in that outcome.
So, if a Seller wants to dump deal #1 for a better deal #2, all they have to do is refuse to negotiate any inspection issues raised by Buyer #1 (of course, if those issues are material, the Seller has to disclose them to Buyer #2).
If the Seller takes that stance, and Buyer #1 wants to avoid losing their deal, they would have to retract any inspection demands before their contract automatically cancels.
Got all that?
See also, “Backup Offer True or False.“
