Published: Jul 17, 2014 9:44 AM EDT
Updated: Jul 17, 2014 9:47 AM EDT

That one thing is called a backup offer.

A backup offer is almost useless, what a buyer should do is submit a backup contract.

The difference is a backup offer is an offer that was submitted but not signed by the seller, (show two contracts). A backup contract is in writing and it’s signed by both parties. It has many advantages. 

1. It's contractual and binding. Yes, you are binding the seller to the price and terms you agreed upon, but it is also binding on your side, so don’t waste time making backup offers on homes you don’t really want to own. Be prepared to live up to the contract

2. Avoids fear/hassle of multiple offers (again). Murphy’s Law says that if contract 1 falls through it will happen at the least convenient time for you, so you will miss out on the home again. A backup contract allows you to be next in line. It’s like having a reserved seat verses general admission. You won’t have to worry about someone taking your seat. DON’T RELY ON THE LISTING AGENT AGREEING TO CALL YOU BACK IF THE HOME COMES BACK ON THE MARKET AGAIN.

3. Gives piece of mind to seller and buyer. The buyer has piece of mind because they are guaranteed to be next in line if Contract 1 falls through. In addition, the seller is in a much better position because the probability of his house closing is much better with two valid contracts. Secondly, the seller now has leverage over a nit-picking buyer and the existence of a backup contract may make buyer 1 more cooperative. Either  way, the seller benefits.

4. Best of all… Allows buyers to keep shopping for something they like better. Here is the “Danger Will Robinson” statement: make sure the backup contract contains the wording that the buyer may withdraw the backup contact any time PRIOR to it moving into first position.

If you have a question for Denny, you can email him at Denny@dennygrimes.com.