With roughly 20% of sales falling through homeowners are accepting multiple offers more frequently.

“It ain’t over till it’s over.” — Yogi Berra, baseball philosopher. In real estate, a house isn’t sold until the Fat Lady sings at the closing. Until then, the seller should keep their options open by accepting backup contracts. Likewise, a buyer whose bid for the property fell short should consider asking the seller to accept their offer as a backup. Simply put, a backup contract is one that moves into the primary position if the first buyer does not close. Some agents disdain them, but others love them.  For a variety of reasons, roughly 20% of all sales fall through. Maybe the place doesn’t appraise at the hoped-for value, and the buyer can’t or won’t make up the difference. Perhaps the inspection reveals daunting flaws, or maybe financing falls through. Or perhaps the buyer realizes they acted too hastily in an overheated market. 

While sellers cannot accept other contracts while one is still active, they can continue to market the property and accept offers, as long as those buyers are told they are in a secondary position. Having standby buyers puts sellers in a stronger position. It places additional pressure on the first buyer to keep the original contract terms in place, and it saves sellers from having to put their homes back on the market. For buyers, the odds aren’t terrific; a 20% chance of the first deal collapsing can seem like a long shot. But if you absolutely, positively want the house and are willing to wait, a backup offer makes sense. To protect yourself, backup offers should be worded properly. Some states have standard backup addendums to cover these situations, but it may be a good idea to call in an experienced real estate attorney.

Source: Lew Sichelman, The Miami Herald