Jim Valentine: Back up offers work
In a dynamic market there is a lot of competition that requires timely precise action. No matter how quick or good your actions are, however, you can miss out on a property that you want to buy. When that happens all is not lost. Talk to your agent about making a back up offer.
Back up offers can be good for buyers and sellers. A back up offer gives the seller a fall back in case something goes wrong in the primary transaction, and it gives buyers hope while they continue to look for other properties. If the primary transaction goes awry the back up buyer and seller can move comfortably into the new transaction and both get what they want, the sale and purchase of the subject property.
A back up offer is just that, an offer backing up another offer. It is actually behind the other offer in priority and subject to the rights of the other offer. You can’t interfere with the contract rights of the first party, but you can have an offer accepted that is ready to be moved to primary opposition in the event the first offer falls apart. Sellers benefit by telling the first party of the back up offer. That usually eliminates any efforts to change the deal, to try to make changes in the transaction along the way. If something really serious comes up that would affect any buyer in the same way don’t rely on the back up offer to look past it. You might kill one transaction by not being flexible only to find you will lose the back up buyer for the same reason.
The back up offer is written like any other offer only it contains language saying that it is subject to the rights of the primary offer. Property written, the buyer retains the right to rescind at any time until notified in writing that he has been moved to primary position. That is why it works so well for the buyer. He can look at other houses, make other offers, and, if one is accepted, rescind on the back up offer. If you get moved to primary position you get what you originally wanted, the opportunity to buy the house you want.
Ironically, being in a back up offer position may give you the market separation you have been needing. In the typical situation, when a transaction falls apart it is put back on the market. In fact, the MLS designation for such properties is BOMK. Naturally, when that happens in a dynamic market the buying frenzy begins anew. With a back up offer you avoid the exposure to the market that invites competition. You simply move to primary position and begin the escrow process. That saves time and a lot of stress.
Primary buyers in a back up situation have the right to continue their transaction and perform in accordance with the terms that were originally agreed to. If something changes and they are delayed, or otherwise need to modify the agreement they may find themselves with an inflexible seller. The second offer doesn’t have to be for a higher price or be better overall, just accepted by the seller. A back up offer does not stop a seller from extending the close of escrow for a primary offer, or making other changes, but it does help keep the seller from getting shoved in a box with no room to move when issues pop up in a transaction.
Our advice: Make sure that you have language in your offer that provides for the time for acceptance beginning when the offer is moved into primary position. That will then be the trigger date for the timing of the conditions in your offer. Back up offers allow everyone to hedge their “bet” in a true Nevada sense of real estate. Make your back up offer and keep shopping. Time will work for you and we all know timing is everything in real estate.
Don’t think a back up offer is a waste of time, they really do work. Things come up that weren’t anticipated and what looks like a solid deal can go south in a hurry. You can put yourself in a great position by taking the time to submit a back up offer.
When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. email@example.com