Should You Make Or Accept A Backup Offer On A Home Sale?
Author:
Kevin GrahamFeb 25, 2024
•8-minute read
So, you’ve found the home of your dreams and it’s for sale, but in a cruel twist of fate, it already has an offer on it. Though you may just have to accept the loss and move on in your search, all hope is not lost.
Home purchase transactions fall through for all sorts of reasons, from contingencies not being met to financing issues. It can’t hurt to position yourself to potentially pick up the pieces of a broken deal and get into a home you had your eye on.
This is where the backup offer comes in.
What Is A Backup Offer?
In home buying, a backup offer is made in acknowledgment of an existing offer and ensures a contract with the seller if that first offer falls through. It’s a legally binding contract that, if accepted by the seller, will put you next in line to purchase the home should the first buyer back out. In return for the seller’s promise that the buyer is next in line, the buyer makes an earnest money deposit into an escrow account.
The terms “under contract – accepting offers” or “pending” mean that the seller is still showing the home in case the contingencies included in the first contract aren’t met. These are not true backup offers, they may become contracts while the new parties wait to see if the first party completes the deal.
If the original offer successfully closes, you’ll be released from your contract and any earnest money you put into escrow will be returned.