You’ve done it! You’ve searched many homes in the home buying process, and none have stood out. Finally, you find the home of your dreams. It has everything you’ve been looking for, from granite countertops, three car garage, a large back yard for your dog and kids, and four bedrooms. You go to make an offer on your dream home, and you’re very excited. Then you find out it already has an offer on the table that has been accepted. Crestfallen, you are resigned to starting over in your dream home search. But then your mortgage broker suggests you make a backup offer and wait and see. Renewed hope! But what exactly is a backup offer?
Lisa Johnson Mortgage Services in Prince George is a mortgage broker with over 20 years of experience helping homeowners find their dream homes. In this blog post, we’ll explain what a backup offer is and how one can help you find your dream home. Contact us today!
WHAT’S A BACKUP OFFER ON A HOME?
A backup offer is usually initiated by the seller when he or she is in doubt about their original offer. Often, you’ll see an advertisement that states “accepting backup offers.” This means that if the original offer falls through for various reasons (the most common being financing cannot be obtained for the home purchase) then the second offer (backup offer) is accepted. If the home sale’s status is pending, this could mean the buyer will accept a backup offer as well.
HOW DOES A BACKUP OFFER WORK?
As the buyer, you would write a formal backup offer (which would then be known as a backup contract), usually putting money down to verify you’re serious. This official offer or contract will then be in place should the original contract fall through. Verbal offers, while offering more freedom for both the seller and the buyer to back out if so desired, were made in the past but are discouraged now.
WHY WOULD A BUYER CANCEL A CONTRACT?
The main reason is the buyer cannot obtain financing for the home purchase, which voids the initial contract. However, other reasons include major structural issues found during the home inspection phase, or those of a more whimsical nature, such as the original buyer found a home he or she liked better.
BACKUP OFFER EXPLAINED
If you put in a backup contract, that contract would automatically kick in despite the findings of the inspection, and you’d either be obligated to purchase the home or lose your deposit should the structural issues are sufficient to warrant so. The seller may also have accepted previous backup offers, which would put yours down on the list. It’s a good idea to find out all the subtle nuances and details from your real estate agent before placing a backup contract for a home purchase.
HOW LISA JOHNSON CAN HELP
Lisa Johnson is Prince George’s best mortgage broker. She helps homeowners secure financing for their home purchase, home equity mortgage, or home refinance. She works with multiple sources of funding in order to get you the best terms for your home purchase. Valuing customer care and experience above all else, Lisa Johnson can answer all of your mortgage application questions. Contact her today!