GLOSSARY — REAL ESTATE TERMS
Backup Offer
A backup offer is a formal offer accepted by a seller as a secondary position while already under contract with another buyer, becoming active automatically only if the primary contract falls through.
How a backup offer works
A seller can formally accept a backup offer while still under contract with a primary buyer. If the primary deal cancels -- often due to financing or inspection issues -- the backup offer can move into the primary position without the property going back on the open market.
Why buyers submit backup offers
In competitive markets, a backup position can be worthwhile on a property a buyer really wants, especially if the primary buyer's contingencies suggest real risk of the deal falling through. It costs the buyer little to be in a formal backup position while continuing to look elsewhere.
WHAT TO DO WHEN CONSIDERING A BACKUP OFFER
- Ask your agent what's known about the primary buyer's contingency status
- Clarify your earnest money deposit obligations under the backup agreement
- Confirm how and when you'd be notified if the primary deal falls through
- Keep touring other properties rather than pausing your search entirely
Can I keep looking at other homes while in a backup position?
Yes -- being a backup buyer doesn't obligate you to stop your search, since the backup offer only becomes active if the primary deal falls through.
How often do backup offers actually become the primary contract?
It varies significantly by market and the strength of the primary buyer's financing and contingencies -- your agent can give you a realistic read based on what's known about the primary deal.
Do I need to submit an earnest money deposit for a backup offer?
Terms vary and are negotiable -- your agent can structure the backup agreement so your deposit obligation only applies if the offer becomes active.