“When can I consider my home sold?”
I hear this question fairly often from my clients. And chances are, if you’ve ever sold a home before, you’ve asked it, too!
While the laws vary in different states, generally the contract is binding once both parties sign the offer. At that point, the closing process begins and you’re one step closer to officially selling your house!
During this time, it’s illegal for you to consider other offers. But what you can do is consider back-up offers.
What’s a back-up offer? Great question! This is when the seller accepts an offer contingent upon the first one falling through. In other words, the contract for a back-up offer would not go into effect unless and until your first contract gets canceled.
Why a Contract Might Fall Through
There are many reasons why a home purchase might not close. The buyer may fail to secure the loan, the home inspection may find issues that you and the buyer can’t resolve, or your Homeowner’s Association might have rules that the buyer just isn’t willing to accept. These are all common obstacles to the closing process.
Whatever the reason, those of us who have been in the real-estate business long enough know that the deal isn’t done until it closes.
In California, that means the day the Grant Deed is recorded in the County Recorder’s office and date stamped by the County Clerk. At that point, your buyer is officially the new owner!
But that doesn’t mean you shouldn’t take your contract seriously. That’s why it’s always a good idea to carefully execute your back-up offer.
How to Execute a Back-Up Offer on Your Home
It’s important that the arrangement allows both you and the buyer to pursue other options. Unless the buyer is willing to wait without seeking an alternative property, the back-up offer should be written to allow for the possibility that they find another home in the meantime.
You as the seller, on the other hand, have to make it clear that you’re currently obligated to another buyer and that you’ll consider the back-up offer only if the current one cancels. This is important not only for legal reasons, but also to make the situation as clear as possible for the back-up buyer.
Pros and Cons for Back-Up Offers
Overall, back-up offers are a great move for you as the seller because, if your primary offer fails, you immediately have another one to fall back on. Plus, it can incentivize your primary buyer to follow through with the contract. It’s great security for you all around!
A word of caution, though… I would advise you to only accept a back-up offer if you truly like it. Don’t commit if you’re not thrilled with the price and conditions, because if your first offer falls through, you’ll have to live with the back-up. Sometimes it truly is better to put your home back on the market if your first offer falls through.
The bottom line is that back-up offers can be a great tool in a fast-moving real-estate market.
And if you’re the prospective buyer, writing the offer virtually guarantees the listing agent will notify you if the home becomes available again. As a buyer, this gives you an advantage in a seller’s market, increasing the opportunity to capitalize on a home that fell out of contract.
Need help buying or selling in the current market? Contact my team and we’ll happily help you reach your real-estate goals!