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.

 

 © 2007-2014 Celeste "Sally" Cheeseman's

Hawaii Real Estate and Relocation Blog.

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Show All Comments
Rainer
187,756
Thomas McCombs
Century 21 HomeStar - Akron, OH

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 . . .

Mar 13, 2012 08:29 AM #33
Rainer
43,961
Ron Tiller
Star Referral - Grand rapids MI - Grand Rapids, MI

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

Mar 13, 2012 08:46 AM #34
Rainmaker
212,354
Judy Orr
Classic Realty Group - Orland Park, IL
SW & Near West Chicago suburbs

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.

Mar 13, 2012 08:54 AM #35
Rainmaker
634,406
Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

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.

Mar 13, 2012 08:59 AM #36
Ambassador
1,029,603
Celeste "SALLY" Cheeseman
Century 21 Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

@ 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.  

Mar 13, 2012 09:23 AM #37
Rainmaker
398,596
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

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.

Mar 13, 2012 09:24 AM #38
Rainer
105,923
Ric Mills
Keller Williams Southern Az - Tucson, AZ
Integrity, Honesty, and Vast Real Estate Knowledge

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

Mar 13, 2012 09:38 AM #39
Rainer
20,677
Dominique Britton
GoHomeToAtlanta.com Realty LLC - 678.250.5022 - Buford, GA
Experience the Difference in Real Estate Services

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

Mar 13, 2012 10:32 AM #40
Rainmaker
605,794
Sharon Simms
Coastal Properties Group International - Saint Petersburg, FL
St. Pete FL - CRS CIPS CLHMS RSPS
Having a backup offer in place is a good tool for the seller against unreasonable inspection demands.
Mar 13, 2012 03:23 PM #41
Rainmaker
1,259,793
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

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

Mar 13, 2012 05:22 PM #42
Ambassador
1,850,853
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert

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.

Mar 13, 2012 06:09 PM #43
Rainer
57,445
Wayne Jackson
Lakeshore Realty 208-714-4109 - Hayden, ID
North Idaho Realtor, Serving Coeur dnullAlene and Hayden Lake

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

Mar 13, 2012 07:05 PM #44
Rainer
72,192
Rocky Dole
West USA Realty Revelation - Maricopa, AZ

I always accept backup offers.

Mar 13, 2012 07:43 PM #45
Rainer
391,845
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

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

Mar 13, 2012 09:43 PM #46
Ambassador
1,029,603
Celeste "SALLY" Cheeseman
Century 21 Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

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!

Mar 13, 2012 11:08 PM #47
Rainmaker
652,335
Evelyn Kennedy
Gallagher & Lindsey, Alameda, California - Alameda, CA
Alameda, Real Estate, Alameda, CA

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.

Mar 14, 2012 03:08 PM #48
Rainmaker
233,579
David Grbich
Ventana Coastal Properties - www.FindCARealEstate.com - San Juan Capistrano, CA
Orange County Real Estate - 949-500-0484

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.

Mar 15, 2012 07:28 AM #49
Rainmaker
356,443
Sylvie Stuart
Keller Williams Check Realty 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagstaff, AZ

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

Mar 15, 2012 12:00 PM #50
Ambassador
1,739,850
Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Charles Rutenberg Realty - Palm Harbor, FL
Palm Harbor & Dunedin FL Residential Real Estate

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.

Mar 17, 2012 09:00 AM #51
Rainmaker
278,701
Kasey & John Boles - Jon Gosche Real Estate
Jon Gosche Real Estate, Boise ID - Boise, ID
Boise, Meridian, Ada/Canyon/Gem/Boise Counties

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

Apr 14, 2012 09:52 PM #52
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Celeste "SALLY" Cheeseman

(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE
SELLING OR BUYING OAHU HAWAII RESIDENTIAL PROPERTY?
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