No Backup Offers Please

Backup offers are when a property is already under contract but a buyer wants to make an offer in the event the transaction cannot be completed. I don’t like backup offers for either buyers or sellers, in any market. 

For the Seller

— If you feel compelled to have a backup, what does that say about your trust in the offer you accepted? It means you likely shouldn’t have accepted that offer because you don’t trust it or the buyer. 

— In this seller’s market where it’s common to have multiple offers, there’s no reason why it shouldn’t be possible to bring a property back to market and find eager buyers again. 

— Practically speaking, if several weeks or more have gone past, a buyer has likely moved on to another property - emotionally or otherwise. 

For the Buyer

— The desire to make a backup offer is a sign of remorse that your offer wasn’t sufficiently competitive. It’s too late. 

— Transactions should close. That is, if buyers and sellers are acting in good faith and able to perform, there’s a very high degree of confidence that a transaction will close. On that basis, making a backup offer is just taunting your emotions: it’s giving you a false sense of confidence and hope that just isn’t real. 

— There are lots of fish in the sea. If you lost out on a property, move on to the next one and compete hard for it. 

What if things suddenly switched and we found ourselves in a buyers market? I’d argue that buyers would have little incentive to sign a backup agreement. Why sign an agreement to buy something when you have all the options? Sure, it might be to a seller’s advantage in that case to have a backup, but again, what’s the advantage to a buyer? 

The key for buyers in this seller’s market is to not find yourself in this position. If you like but don’t love a house, don’t submit an offer because there will be someone else out there who does love it and will compete hard to get it. If you love a house, compete hard, not only on price but on the complete offer package.