As expectant high school seniors (and their anxious parents) know all too well this time of year, colleges have waiting lists.
But so, too, does residential real estate.
They’re called “backup offers.”
First in Line
Such offers are increasingly popular in a screaming Seller’s market, for several reasons.
For Sellers, a backup offer ensures that if deal #1 hiccups, deal #2 is teed up and ready to go.
In fact, that’s the definition of a backup offer: all terms are pre-negotiated, and the Purchase Agreement and all Addenda are signed by the Buyer and Seller.
All that’s needed to “activate” the offer is deal #1 formally canceling.
Sellers who have a backup offer in hand need not repeat the whirlwind of showings, second showings, home prep, etc. that accompany debuting on the market.
Not to mention going through a second negotiation days (or weeks) after the first one is complete (backup offers are typically negotiated on the heels of the first deal — the notion being, “striking while the iron’s hot”).
Too, simply having a backup offer in hand increases the odds that deal #1 will go through.
After all, Buyers who know that there is someone immediately behind them are less likely to aggressively negotiate any inspection issues, dawdle lining up their financing, or otherwise risk jeopardizing their deal.
Advantages for Buyers
So, what’s in it for Buyers?
Having a signed backup offer in hand ensures that they won’t have to compete against any other “runners-up” Buyers if deal #1 falls apart — a genuine risk in more and more deals these days.
The chief drawback?
The backup Buyer typically has to sit tight for 10-15 days while deal #1 plays out.
Which is still better than the excruciating 2-3 months high school seniors have to sweat it out on college waiting lists.