I’m sure you’ve heard (over and over) that San Antonio is currently experiencing tight inventory. This means that we often see multiple offer situations and properties that are appropriately priced and in good condition are selling very quickly. This has lead to a new practice – many buyers, especially those looking in a competitive area and price point, are being coached by their agents to make strong offers quickly and use their option period as a time to really consider their purchase. I am noticing listings coming “back on market”, which means a contract was accepted and then was terminated by the buyer, much more frequently than I ever have before.
What does this mean to you as a home buyer?
Backup offers make sense.
In a multiple offer situation, the sellers are almost always going to accept the offer that is either: 1) cash and a quick closing; 2) a conventional offer with a large down payment; or 3) the offer that nets them the most money. If your offer does not get selected, give some serious thought to resubmitting it for consideration as a backup offer. The sellers are very likely to accept, and if the first position contract terminates for any reason, the house is yours! No further competition!
If your backup offer is accepted, you will deposit earnest money with the title company (some will hold your check and others will actually deposit it) and you will write an option fee check to the sellers. Remember that the option fee check is typically $70-100; it will be credited to you at closing if the deal goes through, and if the first position contract ends up closing consider it a small price to pay for the opportunity to be in the backup position. The earnest money will also be credited to you at closing, or refunded to you by the title company if the first-position contract ends up closing.
In short, backup offers provide an opportunity for you to get the house you want without being the buyer willing to pay the most for it.
You don’t have to lose a multiple offer situation to make a backup offer either. If you start your house hunt on Thursday, but are in love with a house that went under contract the day before, you can make a backup offer on it too. That being said, most contracts will end up closing, so it isn’t wise to spend your time trying to view under-contract properties. But if there’s something unique that you just can’t stop thinking about, it’s worth a shot.
Also, you can withdraw your backup offer at any time, so you are free to continue your house hunt while you wait to see what happens with the first position contract. It’s a creative, win-win situation to consider when house-hunting in a quick-moving market. Call me with your questions – 210–286-9452