When a home is accepting back-up offers, does that lead one to believe that there is an increased chance of failure with the current contract or what?

Asked by jstanko0317, Boulder County, CO Wed Oct 3, 2012

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David Janis, Agent, Boulder, CO
Wed Oct 3, 2012
Last year we were seeing about 30% of contracts listed as "active/backup" fall out of contract and actually go back on the market. This can happen for appraisal, buyer's loan, inspection, or various other reason (buyer finds another house they like better).

This year, the market has improved; here are less homes for sale and more buyers and interest rates are at 3.5%. Only about 5-10% of homes are falling out of contract this year.

Backup offers are great for buyers and sellers - they are especially beneficial during a short sale.
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So pertaining to a short sale, what makes them so beneficial? Your answer nailed the situation perfectly, as the property was a short sale done by the owner and is currently under contract and taking backup offers. Given that it was a short sale that has accepted an offer and is now under contract - though accepting back-up offers - what are the pro's and cons of considering putting in an backup offer?
Flag Wed Oct 3, 2012
Ron Rovtar, Agent, Boulder, CO
Wed Oct 3, 2012
Generally, buyers do not like to be in a back-up position unless they realllllllly like the property. But, as far as sellers are concerned, back-up offers are all good in that the sellers can immediately pivot to the back-up if the first deal runs into trouble. As pointed out by Janet, it also puts the seller in a stronger negotiating position vis-a-vis the first buyer during the inspection period and prior to other deadlines under which the buyer might ask for additional concessions.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
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Janet Thomps…, Agent, Boulder, CO
Wed Oct 3, 2012
Definitely not. It means they will have a guarantee that if there is a problem along the way they have another buyer waiting who wants to buy their home.

It also makes their home appear more desirable if more than one buyer wants to buy it and is prepared to write a contract. It could also mean that the buyer in first position will be less likely to back out and be more reasonable regarding inspection issues etc., etc.,

We love back up offers. Who wouldn't ??

Call Thompson Daviau Realty for all you Real Estate needs
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Sally Grenier, Agent, Boulder, CO
Wed Oct 3, 2012
No, not at all. It just means they have a contract on it. Theoretically, you could put in an offer in backup position, in case the first one falls through. But it's definitely not an indicator of how that first contract is going. Only way to know for sure is to have your agent contact the listing agent.
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