Protecting the Seller’s Best Interests With BACK UP OFFERS

By
Real Estate Agent with Century 21 Liberty Homes RS-#62825
http://actvra.in/x99

 

Back in the Day’ it was the norm to have multiple offers AND have a couple of Back Up Offers as well. A Back Up Offer is a security blanket for the seller should the first contract fall out. The Back Up Offer will immediately be in place with a contingency that the original contract has a successful sign off of the cancellation.

 

In Hawaii, we ‘open’ ESCROW (which is an independent third neutral party that takes care of the interests of both buyers and sellers) with an accepted Purchase Contract and initial deposit of the buyer. They take care of the final settlement with the recording of the documents, paying off the existing liens, mortgages and any other expenses to have a successful closing.

 

The ESCROW Company will also take care of a cancelled transaction and send out cancellation letters to all parties and initiate the Back Up Offer Purchase Contract in escrow and send out the first documents for the Buyer and the Seller.  The transaction date starts at that time.

 

This practice ‘saves’ a lot of headache, time and heartache and held true just a few short weeks ago. A transaction for a listing of mine was in contract and a few days before we left on vacation (with my pushing and shoving for the Conditional Loan Commitment Letter) the loan officer says, “In all good faith, we cannot proceed with the buyer’s loan”. YIKES!  You mean the buyer wasn’t qualified after all? 

 

NO PROBLEMO!  We immediately initiated our accepted Back Up Offer two days before departure on our vacation.  The appraisal is in, survey complete, Termite and Pest Control is scheduled to inspect and give a report, full loan approval and tentative signing is occurring next week.

 

I’d say that the market is picking up in order to receive back up offers.

 

I’d say suggesting to the seller to continue showing for back up offers was a positive.

 

I’d say that a back up offers rock!

 

 

 

Posted by

                                                       

 

Celeste "Sally" Cheeseman  is a Realtor-Associate® and Certified Residential Specialist (CRS) with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs  she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocations, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents, Home Buyers and Sellers.

 

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Comments 51 New Comment

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Rainer
184,664
Thomas McCombs
Century 21 HomeStar

Getting backup offers is a sure sign that the market is improving.  It was not too long ago that it was tough to get any offer at all, let alone a backup offer.

Looking into my crystal ball, I predict that we are in the beginning stages of a new bubble, unless of course the Donald is wrong. 

But on the other hand . . .

March 13, 2012 08:29 AM
Rainer
43,961
Ron Tiller
Star Referral - Grand rapids MI

Back-up offers are rare in my area. Most buyers want to move on to a home that they CAN buy.

March 13, 2012 08:46 AM
Rainmaker
212,354
Judy Orr
SW & Near West Chicago suburbs
Classic Realty Group

We don't see back-up offers in my area much.  Most buyers move on and find something else - our inventory is still high although homes priced well in the lower price ranges are selling quickly and sometimes with multiple offers.  I have a listing now where the buyers have asked for an extension and we thought we were closing this week and there are still conditions.  My sellers are freaking out and I'm wishing we had a back-up offer.  

This house sold quickly but it showed well with the furniture and staging advice the seller's paid for.  They are moving out and it will then be a vacant home and might not look as nice.  I'm hoping we close shortly and I wish back-up offers were more prevalent here.

March 13, 2012 08:54 AM
Rainmaker
629,508
Stephanie/Bob The Ruiz/Miller Team
The Ocala Dream Team
Keller Williams Cornerstone Realty

Hi Sally, I agree with the idea of getting backup offers.  But in our MLS as soon as you "pend" a listing it gets no more showings.  And this is a real issue with short sales as often as they fall through.

March 13, 2012 08:59 AM
Ambassador
1,028,538
Celeste "SALLY" Cheeseman
RA, CRS, Hawaii Mililani Oahu Real Estate
Century 21 Liberty Homes

@ Terry:  I believe it benefits BOTH buyer and seller in a lot of cases. All circumstances will depend on each of our local area real esate markets and of course the situation of the specific property itself. In this particular area of the property...we had lots of activity...but only two offers. The back up offer came in about 2.5 weeks after the first one was in contract. Because of personal circumstances ...I knew the buyers were serious and would hang on should the first fall out. It may not always be the situation although in this case it benefit both sides and when the first one fell out...this one immediately started.  If we do our homework then we KNOW..that no matter what ...a back up offer is certainly better than none at all.  

March 13, 2012 09:23 AM
Rainmaker
398,592
John Cannata
Texas Home Mortgage - Purchase or Refinance
214-728-0449 http://TexasLoanGuy.com

Your best bet is to always keep in contact with the second best offer, just in case. Truth is that you just never know if a buyer will do something to their credit prior to buying the home which now prevents them from qualifying. We have certainly seen it where we tell the buyer not to do ANYTHING until the transaction is complete... but they get excited and buy furniture. The new inquiry, added debt, and slightly lower FICO may drop them below 620 which pushes them out of being qualified. Good idea to keep the backup offer. Im sure it helped make your vacation a little more restful.

March 13, 2012 09:24 AM
Rainer
104,249
Ric Mills
Integrity, Honesty, and Vast Real Estate Knowledge
Keller Williams Southern Az

Backup offers can save the day as long as they are realistic.  In short sales, we get them all the time, just in case.

March 13, 2012 09:38 AM
Rainer
20,677
Dominique Britton
Experience the Difference in Real Estate Services
GoHomeToAtlanta.com Realty LLC - 678.250.5022

Sally, congrats on keeping the Seller happy. Back up offers are a great plan B.

March 13, 2012 10:32 AM
Rainmaker
605,739
Sharon Simms
St. Pete FL - CRS CIPS CLHMS RSPS
Coastal Properties Group International
Having a backup offer in place is a good tool for the seller against unreasonable inspection demands.
March 13, 2012 03:23 PM
Rainmaker
1,238,770
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

Sounds great.  I like it when the escrow officers do all the work.  

March 13, 2012 05:22 PM
Ambassador
1,799,594
George Souto
Your Connecticut Mortgage Expert
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut

Sally I don't know if we are in Back Up Offers here in Connecticut yet, but I am seeing more multiple offers, which to me indicates that the market maybe changing.

March 13, 2012 06:09 PM
Rainer
57,445
Wayne Jackson
North Idaho Realtor, Serving Coeur dnullAlene and Hayden Lake
Lakeshore Realty 208-714-4109

Hi Sally, Great topic. Back up ofers are always a good idea if you can get them.

March 13, 2012 07:05 PM
Rainer
72,192
Rocky Dole
West USA Realty Revelation

I always accept backup offers.

March 13, 2012 07:43 PM
Rainer
374,289
Bill Reddington
Destin Florida Real Estate
Re/max Southern Realty

I would always accept backups also. Our market here is going back to that type of situation as inventory dwindles.

March 13, 2012 09:43 PM
Ambassador
1,028,538
Celeste "SALLY" Cheeseman
RA, CRS, Hawaii Mililani Oahu Real Estate
Century 21 Liberty Homes

Looks like the majority of us believe back up offers are better than none at all...  Also, two is better than one...or none too for that matter lol!

 

You all have a great rest of the week!

March 13, 2012 11:08 PM
Rainmaker
647,735
Evelyn Kennedy
Alameda, Real Estate, Alameda, CA
Gallagher & Lindsey, Alameda, California

Sally:

Taking back-up offers on a property is just a prudent move.  Even though a buyer seems to be gold, you never know what will happen.  If for some reason the escrow falls through having an offer that can move in first position will shorten the delay in closing.

March 14, 2012 03:08 PM
Rainmaker
233,579
David Grbich
Orange County Real Estate - 949-500-0484
Ventana Coastal Properties - www.FindCARealEstate.com

Backup offers are a good strategy for both buyers and sellers. Deals do fall through and buyers in backup can certainly benefit when they do - thanks for sharing.

March 15, 2012 07:28 AM
Rainmaker
347,853
Sylvie Stuart
Home Buying, Home Selling and Investment - Flagstaff, AZ
Keller Williams Check Realty 928-600-2765

Great job getting the home sold--it can be tough if there isn't a back up offer in place to fall back on!

March 15, 2012 12:00 PM
Ambassador
1,722,985
Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Palm Harbor & Dunedin FL Residential Real Estate
Charles Rutenberg Realty

Backup offers are great but here the buyer often requests that NO backup offers can be accepted. It is an option available on our contracts. A simple check of the right box and it is done.

March 17, 2012 09:00 AM
Rainmaker
275,750
Kasey & John Boles - Jon Gosche Real Estate
Boise, Meridian, Ada/Canyon/Gem/Boise Counties
Jon Gosche Real Estate, Boise ID

I never understand why some agents and sellers don't want to accept backup offers.  It's also in a buyers best interest to put in a back up offer if they like the house because a lot of times there are people circling waiting for that first offer to go away and once it does the home comes back on the market and bunches of buyers may try to get in on it, but if a buyer already has a back up accepted, voila, into first position.  Everyone is happy. -Kasey

April 14, 2012 09:52 PM
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Ambassador
1,028,538

Celeste "SALLY" Cheeseman

RA, CRS, Hawaii Mililani Oahu Real Estate
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