The importance of a backup offer
When selling your home, you are going to want to get as many offers as possible. This is obvious, and you hope for multiple offers. You may be thinking, no duh! But something that is missed a lot is the backup offer.
A backup offer is an offer that will take place if the first offer fails. But it is more powerful than you
think. Here are a couple ways of using a backup offer to improve your situation:
1. If one deal falls out, you move right into the next one. This is great. It minimizes the amount of down time to the next offer. There are a few things that you need to be careful of when accepting the backup offer.
— Check for contingencies to sell other properties
— Make sure they have their loan approvals in place, and that they are current.
— Ensure that the offer is matching the terms you are looking for. Sometimes getting a backup offer is not looked at seriously enough, because sellers don’t think they will need it.
2. It puts pressure on the first position buyer :
By this I mean that when buyer number one starts asking for repairs, you just have to say, “let me check with the backup offer”. Suddenly, the nit-picky things are not so important. This benefit comes and goes depending on the market, but it is nice to use for leverage when it pops up.
If your first position deal falls out, make sure your 2nd position buyer is still qualified. Lately rates have been jumping up and down, so we need to make sure you don’t waste time on a buyer that can’t buy. This seems obvious but remember to protect yourself. When a backup offer moves into the first position, update all approvals to make sure none of the credit or income has been negatively affected.
How do you get or receive a backup offer? Make sure the listing reflects that backup offers are accepted. Also, keep advertising the home until it is sold. I don’t mean until pending, I mean sold, closed and the money is in your hand. Contact Redwood Real Estate if you need any help.