Quick Tips and Tricks November 1, 2021

What sellers need to know about backup offers.

4 Things Sellers Need to Know about Backup

It’s no secret that most of the country is currently experiencing a strong seller’s
market. Yet even in this competitive environment, almost 25% of all escrows fall
through before closing. Home inspections, appraisal surprises, and loan approvals
are just a few of the issues which can arise, causing the buyer to pull out of the
An essential component of any listing strategy should be a good backup offer,
meaning that another buyer is willing to step in and close if escrow falls through.
As you consider a backup offer, here are 4 things you need to know:

1. A Backup Offer Is Legally Binding – A backup offer is a fully executed offer,
just like the original, so make sure the terms are acceptable. Typically, the
buyer will include a contingency in the event they find another home.

2. Multiple Backup Offers – In a strong seller’s market, it is not unusual to
accept multiple backup offers. Always clarify the position of each backup
offer and whether you will continue to accept backup offers.

3. Leverage – Backup offers provide leverage during the escrow period as well
as security for the seller. Use backup offers to discourage unreasonable
requests for repairs or concessions during escrow.

4. Earnest Money – Backup offers do require the buyer to submit earnest
money, just like the primary offer. This stays in an escrow account. Often
this is smaller than a typical deposit with the condition to increase the
amount if the offer becomes the primary one.
Backup offers should be an important consideration in any home sale. Not only do
they protect the seller if an escrow fails to close, but the buyer can also have
another opportunity to close on a home they love.