The Blog

Imagine this. You are selling your client’s home for $500K. It is on the market for several weeks and nobody has made an offer. Then, you receive an offer for $450K. Hallelujah! Finally, you have an offer for your client’s property. You negotiate the terms, and escrow is opened. This closing is scheduled for one month from today.

Then, the very next day you receive another offer with slightly better terms. Your client likes this offer so much better, and so he tells you that he wants to accept this offer instead.

Sounds great, right?

Wrong.

Once a seller has an accepted offer on a property, the seller cannot accept another offer unless the buyer does not comply with the terms of the contract. For example, if the buyer is supposed to remove loan and inspection contingencies in 17 days and does not, then if the proper paperwork has been submitted and completed, then transaction can move forward with the second offer.

CAR Creates Back-Up Offer Addendum

It’s a pretty serious thing to break a contract, and that’s why the California Association of Realtors® created what’s called a Back-Up Offer Addendum. So, if a buyer falls in love with a home that is already in escrow, an agent can submit a back-up offer and know that their client is in first position if the other offer on the table falls through.

It’s important for buyers and sellers to understand that sometimes deals do fall through the cracks. Sometimes buyers don’t qualify for the loan or don’t like the loan terms. Or, perhaps the buyer discovers that the home isn’t exactly what he or she thought it would be. So, it is important for listing agents to continually advertise your property for back-up offers until the deal closes. In this way, even if bad things happen, there is always another buyer waiting in the wings.