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