Explaining the Backup Offer
Are you a Maine real estate buyer that has been in a bidding war for properties? Consider making a first position back-up offer on a property that is already under contract. Sellers love a back-up plan to sell, without putting their property back on the market in the event that their current deal falls through. Buyers can use this to their advantage to save money or to mitigate having to bid against other buyers We explain below, how a back-up offer works:
This addendum that will go along with your Purchase & Sale Agreement is known as the Back-Up Addendum. Sellers love having a backup plan in place, in case the deal with their current buyer doesn't work out. Buyers can often come in at a lower price and be locked into a property, should the current Agreement not work out. It also does not cost anything to do.
The first part of the Addendum states who the buyer(s) and seller(s) are, and also what the subject property is.
The Purchase and Sale Agreement is further subject to the following terms:
- The parties acknowledge that the property is already under contract with a current buyer. The current Agreement would need to become null and void, in order for this offer to become valid.
- The seller would then give written notification to the back-up buyer that their current Agreement fell through and that the Back-Up Agreement is now effective. There is also a spot for a closing date (in this case the closing would be 30 days from the written notification that this Agreement is now effective.
- The buyer has the right to terminate the back-up at anytime prior to the back-up becoming effective.
- The seller has the right to modify their current Agreement.
- This paragraph states the buyer's back-up position (hopefully 1st position.)
Notice to Buyer- This is how the seller would notify the back-up buyer that their Agreement is now effective.
Withdrawal Notice to Seller- This is how the buyer would notify the seller that they are withdrawing their back-up offer.
The Bottom Line:
If you're a buyer and are having trouble finding a home, there is very little risk with submitting a back-up offer. If you do find a replacement property, then you would just withdraw the back-up offer.