NorthWest Indiana Real Estate Blog: Back up Offer Closed - In this Real Estate Market Anything Can Happen - We Encourage our Sellers to keep showing their Property!

You are so right!  I don't hesitate to write a back-up contract for buyers, and the closing rate is close to 50%.

Hi Jeff and Grace -- Absolutely.  At a minimum, I always keep a list and these backup buyers are the first to call if something doesn't go through.

We don't have a PS per se, but we do have an Active Contingent. If the offer is contingent on the sale of the buyers home it can be Active Contingent.

Glad to hear you don't hesitate to write them Margaret - some buyers agents do? and we agree that at least 50% (or more) become the primary offer that closes these days, esp. with more stringent lending guidelines, it's good to have them in place!

thanks for sharing your take on this topic

sincerely,

grace

Hi Chris - here in NW IN we've never had more than one back up offer in place at a time (yet :) a list of more than one would be nice ! thanks for taking time to share your experiences.

sincerely,

grace

we have that active contingent flag as well Vickie -

however, PS is very different,

buyers have no home to sell.

- the sellers still can keep property active for showings for a back up offer to the 1st accepted offer in case the 1st offer does not close according to contract.

sincerely,

grace

I wish in our MLS we could do this. We don't have that kind of status. We have active, pending, and closed. Period.

I frequently do what you do, then when someone schedules a showing I will tell them the house is under contract, pending inspections, or pending mortgage commitment, or whatever.

Sometimes just calling and checking up when there are no backups can work wonders, too.

Not so strange given the number of deals that fall apart because financing problems somewhere along the chain. Lots of agents are unclear on rules for accepting and queuing back ups. In my state, it's whatever the seller instructs. Bets to get everything in writing.

Wow Erica, we have many different MLS statuses for properties on the market here in NW IN i.e. contingent on inspection (SI) contingent on sale (CS), contingent on close (CC)and PS as described in post - that is in addition to pending (P)and active and closed.

do you have a backup offer addendum if they want to write on it and be assured of the next spot should the 1st offer fall?

real estate specifics vary state to state :)

thanks for sharing your example

sincerely,

grace

This is a smart thing to do in this current market.

agreed Cheryl

thanks for your helpful tip.

sincerely,

grace

We have a great back up offer addendum that gets it in writing Leslie, as you pointed out there are many links in the chain of events that lead to a successful close that are beyond the REALTORS control :)

thanks for sharing your input

sincerely,

grace

Yes,Tammie, we agree- we've only been using backup offers the last 2 years - before that things were more of a slam dunk lol

thanks for taking time to comment

sincerely,

grace

Hi Jeff and Grace~  It is up to our sellers if they want us to keep showing or not.  Most buyers shy away from a home with a contract, but in reality, they could still have a shot at it!  They do fall through sometimes!

I'm always happy to have back up offers.  Everyone may hope the original escrow closes, but it doesn't always happen.

We have a pending continue to show status in our MLS.  If nothing else, backup contracts certainly make the first contract easier to close if credit is not an issue.  It holds the first buyer's feet to the fire--no nit picking--you know, wanting the house rebuilt after the inspection etc.

Good reminder to us all.

I like that status, PS.

We use CTS...Continue to Show in Ann Arbor.

But, most agents don't.

However it keeps it active in all the national sites.

Back up Short Sales offers close quite frequently and faster as Buyers #1 get tired of waiting.

I just had a back offer go through as well.  I love it because we had an offer on a home that was contigent upon us selling ours. 

What really gets me is when tha agents put up a pending sign immediately before the inspection process or worse yet a sold sign!  It really isn't in the sellers best interest at all...I have also attempted to schedule a showing for a home just under contract only to have both the seller and agent tell me they just don't want showings....go figure..

I'll always encourage my clients to write a back up offer on a short sale property they like, because it's very likely the original buyer will walk.

I use the same practice. I always urge sellers to take a back-up offer. You never know what will happen these days!

You better believe it.  Ours will remain "Active with Contract", bring on the offers.  I had one exactly like you stated here.  You never know what can happen!   

Grace,  I love our Active B for Active taking backups status.  It is beneficial to clients, and it sounds like it worked very well for your clients.  Great advice to them!

We don't have specific backup offer addendum that I am aware of (I am going to look at my software now to see!).

We use 4 MLS systems and some of the others have many many statuses. Our little local one is very limited.

Hi Jeff,  As long as potential buyers are aware that there is  an accepted offer I don't hesitate to allow additinal showings.

Great post! I agree and more so now with the bank requirements. As a listing agent, when I receive and offer, I write in the contract that all parties agree to keep the property in Active Status in the MlS until all contigenties are removed. This keeps the selling agent and buyers on top of things as well as protecting the seller in hopes of backup contracts.

In representing a seller, having back-up offers is a wonderful thing.  It puts pressure to perform on the original buyer and provides a waiting list in case that original deal falls apart. 

However, for a buyer, I'm not so sure there is a benefit to being in the queue.  First of all, if the first deal falls apart, there may very well be a solid reason why...and even if disclosed, that may place the property in a "damaged goods" scenario which would not merit the previous price.  Secondly, if time has passed in the current market, there very well may be a different valuation based on price movement in the market or new competition. 

My recommendation to buying clients is to allow me to notify the listing agent that my buyer has a strong interest in the property and would like to be notified if the status changes, but not to formally write a back up offer. 

Of course, in some distressed sale circumstances, where there is a long list of ready, willing and able buyers, and there is a high probability that the original deal will fall apart, it may be a good idea to try to get to the top of the list.

Hi Vicki - you are correct it is up to the sellers to decide - and many buyers do shy away from taking the chance on back up - but this one didn't and it did work out well for our sellers to not skip a beat and proceed to close with very little delay.

Hello Christine - you are right - no one wants any deal to fall - but that is not always the case nowadays.

Hi Barbara, your comment is so true and i was laughing when I read it as I've never heard "wanting the house rebuilt after the inspection" lol

Hi Missy - this was not a short sale transaction, but you are correct, unless buyers are counseled in advance about the longer response times in short sales, they tend to have less patience.

Congrats Catherine! A backup with a contingency - wow!

LOL Lori i I have a story to share that your comment reminds me of. Every week we drive by a home on the way to church on Sunday and i cannot tell you how many times in the past 4 months I've seen a sale pending go up and then come down and then a SOLD rider go up and then come down - now there is a rider that says REDUCED lol.

appreciates everyone time and input

sincerely,

grace

Smart move Bill - we'd do the same if we are #2 spot :)

Hi Christopher - you can say that again - I'm sure we each have a story that could go into a book about deals gone south ( no pun intended on the "south" - Texas is on my list of places to visit someday :)

I like your MLS flag better Kevin - PS is not as clear as yours Acive with contract!

Active B  is also clearer flag on the MLS than ours Heather - many times we have to explain to agents scheduling appointments that the 1st offer cannot be bumped - and that a backup addendum must be used.

4 MLS systems Erica ?! wow, our one MLS covers 5 counties!

We confirm that with the buyers agent Bill so all parties are clear it's a showing for a backup offer only,

Wow Monique - never had it written in the offer -probably because our MLS rules for PS is so clear and as long as the seller agrees to continue to accommodate more showings we will keep working to get a back up in place if possible,

Hi Howard & Susan great points, however ,i would venture to say the BUYERS in our example may disagree with you, as they now have a home sweet home:)

appreciate everyone's take on this subject - it's been a learning experience!

sincerely,

grace

I agree, it is not a done deal until title changes and with short sales taking so long, that a backup offer has a good chance of closing.

You are right Iris - and it doesn't have to be a short sale to take a backup offer either :)

sincerely,

grace

In our MLS the days on the market continues to grow so it is not worth it given the fact that most agent will not show a property that is BUP anyway.

In our MLS the days on the market continues to grow so it is not worth it given the fact that most agent will not show a property that is BUP anyway.

Not all agents show them here either Bill - nor do they explain the status to their buyers, however we have found if a person really wants a home they will place a backup offer and so far 3 times in the last year the back up buyers became the homeowners !!!

thanks for stopping by,

sincerely,

grace

Our MLS rules say that once a contract is accepted the listing has to go pending within 24 hours and good luck on even a showing let alone a backup. I don't agree but the rules are the rules.

wow Charles -  you may want to re-examime those rules that were written in times past where deals just about closed themselves LOL  .....in today's lending environment where anything can happen up and lending rules/conditions change daily making a sure thing not so sure anymore.

sincerely,

grace

Doing this very same thing on a property i have listed. The seller asked me why as we have an offer into the bank. My answer to her was things can go crazy at any time. We need to be prepared for the worst and hope for the best.

Great news Robert - we have another one going as well!

Sincerely,

Grace