Backup Offers: Making Property Available, Seeing Property & Making Offers After Already Under Contract

A home that went under contract 3 times, the 3rd time via a backup contract, with the seller terminating offer #2 once contractually able with offer #3 in hand.

In this article, I'll go over backup offers from a buyer and seller standpoint.

Importance of Continued Showings After Initial Contracts for Sellers

I Highly Recommend Sellers to Allow Showings Until Property is "Clear to Close" w/ no Remaining Contingencies. Sometimes a seller will want to stop showings immediately after a buyer goes under contract, no matter how many contingencies and no matter how weak the offer. I would strongly discourage that. Here's why:

A home inspection request of repairs or other concessions can come back that is completely unreasonable.

When There's No Home Inspection, There are Still Risks When Financing is Involved

Even if No Home Inspection or Financing is Involved, There are Still Risks

Sometimes buyers ask about performing showings on properties already under contract or making offers on properties already under contract. I typically don’t recommend it because it's typically a waste of everyone's time including the buyer's and the occupant's, but there are some exceptions:

1. Pending Release

2. “1st Right of Refusal” or “Kickout Clause”

3. Quick Offers on Certain REOs

4. Unusually Unique Criteria

5. Willingness to Make Unusually Strong Backup Offer & Take Risks to Secure the Home

6. Offers Converted to Backup Offers:

At times, offers made on homes prior to contract ratification with another buyer can be converted to backup offers. These offers are the most viable possibilities of backup offers in my opinion.

Why Offers Made Prior to Contract Converted to Backup Offers are the Best Backup Offers

Differences in How Backup Offers Are Structured

Key Questions for backup offers/showings:

1. How strong is the current contract?

2. Are there any backup offers, & how strong are they?

3. Are pre-backup-offer inspections available to remove contingencies of a backup offer?

Potential Issues with Backup Offers:

1. If you don't have a solid search going with an agent yet, your time would typically be much more effective with getting an updated search than it would making a backup offer.

2. Holding You Back on Other Offers if You Don't Have the Funds for 2 Properties

3. Payment for Home Inspection May be Needed to Back Out

4. Often, we won’t know what another contract amount is for.

5. No More Showings Sometimes After a Contract Ratified

Related:

• Should a Buyer See a Property That Already Has Offers?

• Making an Offer on Real Estate

• Expeditious Showings

• Expeditious Offers

• Buyers Preparing for Showings

• Next Steps After Seller Receives Offer(s)

• Hampton Roads Offers: The REIN Standard Purchase Agreement

• Phantom Property Availability

• SE VA House Seller Guide

• SE VA House Buyer Guide