Back-up Offers Make Sense in a Low-Inventory Market

Given the tight supply of available homes for sale in some parts of the United States, buyer agents may want to encourage clients not to write off a property that they love but that is already under contract. Many deals today are collapsing before they can close — in large part due to stringent lending criteria — so submitting a back-up offer may be worthwhile for buyers who have their heart set on a particular home that another bidder got to first. Any back-up offer should be put on paper, drafted by a lawyer or, when possible, using a form provided by the real estate agent. The California Association of Realtors, for example, provides a Back-Up Offer Addendum (BUO) that can be included with a purchase bid or counteroffer. Back-up offers are less than ideal, considering that would-be buyers may find themselves in limbo while waiting to see if the original offer goes through or not. And even if it does fall through, there may be multiple back-up offers on a plum property; so they may have to contend with other bidders in position ahead of them. Still, these transactions do sometimes work out in their favor and make submitting a back-up offer a sensible move. | Read More