I like the idea of offering backup offer to keep the winning offer in line with home inspection issues.
Assuming you have an agent, and this isn't a dual agency situation with one of the offers, follow your agents counsul.
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I agree with the answers below: as long as you have not signed the purchase agreement for the full price offer, you can accept the higher offer from the other party. You may want to use the two offers and see if they will get in a bidding war for your home.
Hope that helps!
Boulder Bay Realty
In Indiana we have a place on the listing contract about Multiple Offers. Your agent would send a Multiple Offer Disclosure form to everyone that has submitted an offer on your property. This is to inform them that more than one offer has been submitted. It is also their chance to make their best and final offer.
I have seen this backfire with one of the parties just dropping the offer. Some people do not feel comfortable with this as it seems like bidding to them. I would say most of the time though they will submit offers.
The risk here is if you counter them both and then they both walk away. The old "bird in the hand" philosophy.
If you have a fully executed contract with the full price buyer, then you can accept the higher offer as a back up offer. Then, watch the full price buyer like a hawk during their inspection period, and during their loan approval period. If one thing falls out side of the contracted time-period, move quickly to cancel and when the contract has been cancelled you may move ahead with the higher offer. Make sense?
Hope this helps.
Leslie Eskildsen, Realtor
As seen in the Orange County Register: http://www.ocregister.com/articles/deal-268083-buyer-home.html
Usually there is a five business day provision for attorney review, so that is your window to kill first offer. But why? Unless someone comes in significantly higher, then you risk house not appraising out and the deal falls apart with buyer #2. Strength of non price factors should be the primary reason to look for an out with a contract. Talk to your local agent and attorney.