“When can I consider my home sold? This is one of the most common questions real estate agents are asked. While the laws vary in different states, generally the contract is binding once both parties sign the offer. At that time the closing process begins. This is also the time when sellers must stop considering other offers, but they can accept backup offers.
What is a backup offer? This is when the seller accepts an offer contingent upon the first one falling through. There are many reasons why the home purchase might not close—the buyer may fail to secure the loan, the home inspection may find issues the two parties can’t resolve, it could even be that the Homeowner’s Association has rules that the buyer is unprepared to accept. Whatever the reason, real estate agents know that the deal isn’t done until it closes.
A backup offer should be carefully executed. Both buyer and seller must be able to pursue other options. Unless the buyer is willing to wait without seeking an alternative property, the backup offer should be written to allow for the possibility that they find an alternative home in the meantime. The seller, on the other hand, must make clear they are currently obligated to another buyer and will consider the backup offer only if the current one cancels.
Back-up offers can be a great tool in a fast-moving real estate market. Writing the offer virtually guarantees the listing agent will notify you if the home becomes available again. This gives the buyer an advantage in a seller’s market, increasing the opportunity to capitalize on a home that fell out of contract.