Should Sellers Accept Back-Up Offers On Short Sales?

By
Real Estate Agent with Tutas Towne Realty, Inc.
http://actvra.in/l8p

Can't Have Enough Back-Up...I had a short sale listing in Davenport, FL get under contract and go pending recently. We have had multiple buyers express interest in putting in back-up offers since it went pending. I also had a buyer making an offer on a Lake Nona short sale who maybe didn’t want to allow the sellers to take back-up offers. Both of these situations got me thinking about back-up offers and whether sellers should take them.

The short answer is a definite yes. There is no risk to the current buyer if there is a back-up offer and it alleviates a lot of risk for the seller. There is no reason, that I can think of, why a seller shouldn't take back-up offers. Let’s look at it from both the buyer’s and seller’s perspective.

From the seller’s point of view, they want to do everything they can to make sure the short sale process is successful. Even on a short sale the seller should require that a buyer put up an earnest money deposit at time of contract rather than at time of short sale approval. If a buyer isn’t serious enough to put a deposit up then they aren’t serious enough to get under contract on a short sale in the first place. If for any reason the deal doesn’t work with that current buyer then having a back-up offer from another buyer ready to go could save a month or two of marketing the home a second time. I say “could” because the back-up buyer may have moved on as well, you never know. But there is certainly no reason under the sun that a seller shouldn’t take back-up offers. But if there are, I’m sure some of you guys will set me straight in the comments section.

From the buyer’s perspective I also don’t see any reason not to allow the short sale seller to take back-up offers. One argument I have heard in the past is “what if the seller just decides to go with the other contract?” If the seller executes your offer and there is now a binding contract, then it’s just that...a binding contract. There are legal ramifications if either party doesn’t perform under the terms of the contract. A back-up offer just lets the seller cover all their bases. In my opinion, there is no risk to a buyer when allowing back-up offers on the short sale they have under contract. But again, if you have a different perspective or idea, please let me know it in the comments section. I’m not an old dog, I can learn some new tricks. :)

It never hurts to have a little back-up. What do you guys think?

Image courtesy of seantyler at Flickr

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Topic:
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Location:
Florida Polk County Davenport
Groups:
Club Chaos
Cool Stuff
Diary of a Realtor
Out Of The Box!
The Art Of Marketing You
Tags:
short sales
backup offers
davenport
buyers
sellers
contracts

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Rainmaker
712,248
Jackie Connelly-Fornuff
Century 21 AA Lindenhurst NY
Long Island NY Real Estate Agent

Just with any other home, back-up offers should be there. With a short sale, the FBI is looking closely at them. If I were to tell an agent we are not taking back-up offers, myself and my broker could be in big time trouble. I have a short sale now with BofA and they said no back up offers. I had them email a letter stating why so my backside is covered.

October 11, 2011 03:54 PM
Ambassador
1,394,612
Tammy Lankford
Your Lake Sinclair Expert (706-485-9668)
Lane Realty

If I represent the sellers, bring them on... every time.  I have no problem with it.

October 11, 2011 09:12 PM
Rainmaker
398,592
John Cannata
Texas Home Mortgage - Purchase or Refinance
214-728-0449 http://TexasLoanGuy.com

The fact is that nothing is gauranteed, so its best to have the back-up offer just in case. Its not great to BE the back-up offer because you don't know for sure you'll get the house. But its best for the seller to have a back-up plan. You would not be doing your service as the Real Estate Agent if you did not consider other offers and / or keep a backup offer available.

October 12, 2011 12:04 PM
Rainmaker
268,082
Kasey & John Boles - Jon Gosche Real Estate
Boise, Meridian, Ada/Canyon/Gem/Boise Counties
Jon Gosche Real Estate, Boise ID

The only way a buyer can dictane whether back ups are accepted or not would be if it was agreed to in the contract right?  As a seller I don't think I'd willing to sign a contract that says I can't accept back up offers.  I think seller's for sure should accept back ups.  Eric does have a point as to why it sometimes might not benefit a buyer, but still I think it's ridiculous as a seller not to consider them.  I've had agents who have discouraged offers and backups for whatever reason and sometimes I think it's just out of laziness and not wanting to have to do the paperwork for extra offers...worse part is when I see the house come back on the market. Too bad! Could have already had another offer! -Kasey

October 13, 2011 01:43 AM
Rainmaker
68,225
Dominic Tartaglia
GRI, SLO first-time homebuyer specialist
Tartaglia Realty

Nate, If that image looks anything like your backup offer I imagine that you get your backups accepted quite often. The truth of it is that being in the backup seat doesn't hurt and I actually closed a backup offer this year and got a payday out of relatively little hasle.

October 13, 2011 04:30 PM
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Rainmaker
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Nathan Tutas

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