Tuesday, May 30, 2023 / by Tanesha Boler
In real estate, a backup offer refers to an offer made by a prospective buyer on a property that is already under contract with another buyer. When a seller accepts a backup offer, it means that if the current contract falls through, the backup offer will become the primary offer and move forward towards closing the deal.
Backup offers are commonly used in real estate transactions to provide a safeguard for sellers in case the initial buyer fails to fulfill their obligations or encounters issues with financing, inspections, or other contingencies. By accepting a backup offer, sellers have an alternative option readily available, reducing the time and effort required to re-list the property and find a new buyer.
If the primary offer collapses, the seller can activate the backup offer, typically by providing notice to the first buyer and allowing a specific period for them to resolve any outstanding issues. If the initial buyer cannot meet the requirements within the specified timeframe, the seller can then proceed with the backup offer and enter into a purchase agreement with the backup buyer.
It's important to note that backup offers do not guarantee the backup buyer will ultimately purchase the property. The seller is not legally obligated to accept the backup offer or proceed with the backup buyer if the primary offer falls through. However, backup offers serve as a contingency plan for sellers and offer an opportunity for backup buyers to potentially secure a property they are interested in if the circumstances align in their favor.