May 25, 2018

Some Buyers Weigh a Back-Up Offer

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Some Buyers Weigh a Back-Up Offer

With shrinking inventories, some buyers are growing frustrated at the dwindling supply of homes in the lower and mid-level price ranges. Plus, the homes that are available, in some markets, are triggering multiple bids and some home buyers keep losing out.

As such, some buyers are considering making back-up offers on properties that may already be under contract, Realty Times reports. 

“This is especially true in the current environment, because tight lending standards seem to be causing a larger than usual number of fall outs,” Realty Times reports. “Also, even though there may not be so much in the way of short-sale ‘steals’, there is still a considerable inventory of short-sales; and those have a way of falling out too.”

Back-up offers, which are often submitted in writing as an addendum to contracts, is contingent on the written cancellation of an original offer on a home. If the first deal falls through, the buyer with the back-up offer would be next in line. Sometimes there are more than one back-up offers on a property, too. 

Some buyers are hesitant with back-up offers, not wanting to sit on the sidelines while they wait to see if the deal actually goes through. But some back-up agreements allow home buyers to keep looking for homes as they wait, and allow buyers to cancel the agreements by a certain time. 

The California Association of REALTORS® has produced a standard form for back-up agreements, called the Back-Up Offer Addendum. It can be included with a purchase offer or counter-offer.

Source: “Back-up Offers Make Sense In a Low-Inventory Market,” Realty Times (Dec. 11, 2012)

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