Offers and Backup Offers

June 1, 2010 | By Kelley Koehler | Filed Under Purchase Contract

Someone the other day told me he wanted to play the backup offer game on a property that was already under contract with another buyer.

“You know. Make the seller an offer and let them kick the existing buyer out.”

Yeah. That’s not exactly how it works. Let’s review.

Most of the time, when a property is under contract, the status changes to Active Contingent. In an Active Contingent status, the seller can not kick out that buyer. The buyer can walk away from the deal due to inspections or because a different contingency wasn’t met, but there’s no method for a seller to unilaterally kick that buyer out of the deal.

As a home buyer, at least in Tucson, you can make a backup offer on that property, and the seller may chose to accept your offer as backup, or they may not, at their discretion. If your offer is accepted as a backup, you have to wait and see if the first buyer walks away from the deal. The seller may be less flexible in their repair negotiations with the buyer if they’ve got your offer waiting in the wings, but the seller can’t get rid of that buyer directly.

Even if your offer is for more money or has better terms than the existing buyer – in an Active Contingent status, the seller can’t just decide to take yours and ditch the existing buyer.

Active CAPA properties are a whole other deal. With a CAPA property, the existing buyer usually has to sell their home first, so there’s a home sale contingency on the deal. (Either that, or it is a bank owned property or short sale where the bank will look at multiple offers.) In this instance, the seller can accept your offer and then go back to the first buyer and make a demand – they tell the first buyer to either remove the home sale contingency or walk away.

If that first buyer walks, then your offer becomes primary and you’re now under contract to purchase it.

Quite honestly, it’s a “game” that rarely works. Either the first buyer doesn’t walk away from the home or you get tired of waiting and find another home. It’s possible, but infrequent.

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Southeast Tucson Real Estate Market Report – April 2010

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