Should You Make a Backup Offer on a Salt Lake County Home?

A backup offer is an offer on a home that already has an accepted contract. If the first contract falls apart, your offer moves to the front of the line. If the first deal closes, your offer ends and you get your earnest money back, according to the terms you signed. It lets you stay in the running for a home you want while keeping your options open.

Charisse Walker is a real estate agent with Chalker Properties Group in Salt Lake and Davis County, Utah, and a licensed mortgage lender. She helps buyers decide whether a backup offer is worth the wait and writes them so the terms are clear.

This article covers how backups work, when they make sense, how they differ from a regular offer, what to watch for and a typical example. The exact terms come from the contract and any addendum you sign, so your agent should walk you through them first.

A regular offer is one the seller can accept now, and it creates a binding contract that moves forward right away. A backup offer is written to take effect only if the first contract ends.

In practice that means:

• The seller can sign a backup offer without cancelling the first deal.
• The backup is typically set to become the active contract if the first one is released or cancelled, and its deadlines start from that point, not from the day you signed. Confirm this in the wording.
• How long your backup stays in place can be written into the addendum. Ask what end date applies, so you are not waiting without a limit.
• The price and terms in your backup can differ from the first offer. Sellers often keep the better one.

Backups are written with an addendum to the purchase contract. Your agent should explain the one used for your offer and show you the section that says when your offer becomes active.

Backups tend to make sense in a few situations:

1. You love the home and nothing else comes close. The wait is easier when you have a clear first choice.
2. The first contract looks shaky. The first buyer might have a loan that is not approved, a home to sell or an inspection period still open. Your agent can ask the seller's agent, in general terms, how far along the first deal is.
3. Inventory is thin. If few homes fit your needs, staying in line for one may cost little.
4. You can be flexible on timing. You may be able to keep looking and still wait for an answer.

They make less sense when you need to move by a fixed date, since you cannot know whether the first deal will close.

There are three.

• You may wait and still lose. Most contracts that are accepted go on to close. Do not count on a backup becoming the first position.
• Your money may be tied up. You may be asked to submit earnest money with a backup. Ask how and when it is returned if your offer does not move forward.
• It can slow your search. If you stop looking while you wait, you could miss another home. Ask whether you are free to write other offers while your backup is in place, and what the contract says about withdrawing.

One more risk: the first buyer's deadlines may pass without you knowing. Ask your agent to check in on the status regularly and to tell you the date that matters most, which is when the first buyer's inspection and financing protections end.

1. Your loan. Make sure your pre-approval is current and will not expire while you wait. Ask your lender how long it holds up and what could change it. The guide to getting pre-approved in Utah explains the pieces.
2. The home's condition. You should still inspect it. Ask whether you can schedule an inspection in advance, since access may depend on the first buyer's contract.
3. Your own deadlines. Ask when your inspection, appraisal and financing periods start if your offer becomes active.
4. How you will be notified. The contract should say how the seller must tell you the first deal ended.
5. Your next steps. If you hear nothing, who follows up and when?

The article on what happens after an offer is accepted lists the deadlines you will face once your offer moves up.

Knowing the usual reasons helps you judge a backup's odds. Common ones are:

• An inspection that turns up repairs the sides cannot agree on
• An appraisal below the contract price
• A buyer's loan that does not get final approval
• A buyer who cannot sell their current home in time
• A title issue
• A buyer who changes their mind inside a contingency period

Low appraisals and inspection problems are the ones your agent may be able to read from the outside. If the first buyer's deal has an inspection period still open, the odds of a change are higher than if it is nearly done.

A backup competes with the first contract and with any other backups, so the details matter.

• Offer terms that help the seller. A reasonable closing date, a clean financing plan and a short inspection period can make your offer more attractive, as long as you can live with them.
• Show you are ready. A current pre-approval letter and proof of funds for your earnest money tell the seller you can move quickly.
• Be specific about timing. Say how soon you can inspect and how fast your lender can work once your offer becomes active.
• Keep it respectful. The first buyer has a contract. Your agent should not contact them or interfere with their deal.
• Stay flexible on price only if you mean it. Raising your price in a backup should be a choice based on comparable sales, not a reaction to pressure. The guide to winning multiple offers in Utah covers that judgment.

Your agent can tell you what the seller's agent is likely to value, but the seller decides.

This is a typical example, not a description of a particular client. A buyer in Salt Lake County finds a home they like, but it is already under contract. Their agent calls the listing agent and learns the first buyer's inspection period is still open.

The buyer decides to submit a backup offer at the asking price with a standard inspection and financing period. The seller signs the backup addendum. The buyer keeps touring other homes and tells their agent to continue checking on the first contract.

Eleven days later the first buyer cancels after an inspection issue. The seller releases that contract, the buyer's offer becomes active and the deadlines in their contract begin. The buyer schedules their inspection that week. Had the first deal closed, the buyer would have gotten their earnest money back and kept looking, having lost nothing but a few phone calls.

Can a seller accept more than one backup offer?

Sellers can usually accept more than one, and they are ranked in order. Ask your agent where yours stands.

Do I get my earnest money back if the first deal closes?

That depends on the contract you signed. A backup is written so that your money is returned if your offer never becomes active. Confirm the exact terms.

Can I back out of a backup offer?

Check the addendum. Many allow you to withdraw before it becomes active, but the wording matters.

Can I make an offer on another home while my backup is in place?

That depends on your contract. Ask before you do, so you do not end up bound to two homes.

Is a backup offer worth it?

It can be, if you are flexible on timing and love the home. It is a poor fit if you need certainty by a specific date.

Charisse Walker is a real estate agent with Chalker Properties Group in Salt Lake and Davis County, Utah, and a licensed mortgage lender. When she is your agent, she checks how far along the first contract is, writes the backup addendum clearly and watches the deadlines for you. Your loan stays with your own lender.

If you are early in your search, the home buying page covers the steps, the Sandy area page compares the area on commute and price, and the process page shows how Charisse works.

Found a home that is already under contract? Tell Charisse which one and she will help you decide whether to wait in line.