What is a backup offer?
A backup offer is a listing status that indicates that the seller of the property has accepted an offer from a buyer and is still accepting other offers. The seller of the house uses offers from other buyers as a backup in case the offer he/she accepted does not turn into a sale.
In real estate, nothing is guaranteed. People submit offers and later walk away from the deal even if they have to pay penalties. This is why some sellers continue to accept offers even if they have accepted other offers.
Reasons a seller can take a backup offer
There are many reasons a seller can accept a backup offer. The biggest and most important one is that the seller has doubts about finalizing the deal with the original buyer.
For example, if the buyer must sell their own house before finalizing the deal, it can be difficult for the seller to wait for this kind of buyer. Without a guarantee that the buyer’s house will be sold on time, the seller can keep the offer on the table and accepts more offer in case the deal does not go through.
Another case is when the offer is subjected to mortgage approval contingency. Before you buy a house, the seller of the house must have proof that you have the money to buy the house. The payment can be the full amount in cash or a mortgage approval letter.
Sometimes buyers submit an offer before they are accepted for a mortgage. For this reason, the seller will accept the offer and the sale will go through only if you are approved for the mortgage. In the meantime, the seller can continue to take backup offers on the same property since there is no guarantee that your mortgage application will be accepted.
Should you submit an offer on a house listed as a backup offer?
The fact that a seller is taking backup offers is an indication that he/she has no faith in the original offer. In addition, an accepted offer does not indicate a sale.
For this reason, you can submit your offer as long as the seller is accepting them. The only thing you need to pay attention to is to not pay more than you are supposed just because there is a pending offer on the property.
