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What is a Back-Up Contract?

March 14, 2018 By Doug Francis

Back Up Real Estate Contract Strategy in low inventory markets

“When one door closes, another opens.” – Alexander Graham Bell

Breaking bad news to a client is the pits.

Imagine the call from the buyer’s agent saying, “after the home inspection or after reviewing the Homeowner’s Association disclosure docs, that the Buyer is declaring the contract Void.”

Then you have to call your client with the bad news. Hey, I’ve been on both sides of that phone call and it’s never easy.

It happens.


Home Sellers, like Buyers, can get caught up in the excitement of multiple offers and bidding wars. Who wouldn’t?

But accepting the highest priced offer can also be accepting the offer with the greatest risk of not going to Settlement.

Emotions run high, and this isn’t HGTV where things always work out.

Imagine that you are the buyer and this is YOUR money, and you know that you can pull the plug on the deal for many reasons.

It happens.


secure a Back-Up Contract right away

Home Sellers can eliminate much of the risk simply by designating the next best offer as the “Back-Up Contract”.

For example, the standard sales contract paperwork we use here in the Vienna real estate market includes an optional Addendum with Association approved clauses.

So, if the original contract becomes Void, then the Seller can send proper Notice to the Back-Up buyers which automatically makes their offer the Primary Ratified contract.

Ta-da!

In most cases, these buyers will be super excited and the Seller won’t have to go back to square one cleaning up their house and getting ready for an open house.


;


95% of home buyers never consider this stealth strategy

This strategy can help home buyers in low-inventory markets like we almost always have in sunny Northern Virginia.

When you are house hunting and making offers, there is nothing worse than coming in second. Runner-up. Silver Medal. Yes, the bridesmaid again!

The difficult truth is that a Seller can only sell their home once, and can anguish over selecting one choice over another.

In the event you are a runner-up on a home you really, really want, have your agent work to make your contract the back-up contract.

By positioning yourself and securing that role, you will have created an opportunity that 95% of home buyers never consider.

So, why haven’t they considered this strategy? Because their agent never suggested it.

Again, it’s a long shot and agents would rather sell you something else.

Across the country, real estate agents and home buyers are getting trained to follow only the newest listings, to see them quickly, and to submit offers before a deadline. It is exhausting and likely produces the same result.


Recommendation

My recommendation is to consider using the Back-Up Contract strategy, especially in low inventory markets.

When a home has inspired you to make an offer, keep your emotions in check and realize that being the bridesmaid may be a blessing in disguise.

Smart Real Estate.

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Filed Under: Blog, Home Buyer Tips, Home Seller Tips, Living Here Tagged With: Home Buyer Tips, Home Seller Tips, Vienna Virginia

About Doug Francis

A Realtor specializing in unique and new homes around Vienna, Virginia, Doug started writing a first-hand blog about his everyday real estate experiences a decade ago. In-depth, helpful and fun has always been the objective. Outside real estate, he was profiled in a commercial for Verisign's "Where the World Clicks" global ad campaign, and was quoted in Money Magazine's Best Places to Live article on Vienna (#3!). He's a Boston University graduate who feels morning coffee is non-negotiable.

Vienna real estate agent Doug Francis

I’m so excited that you found me! Yes, this site covers real estate, but also a lot about lifestyle and  living in Vienna, Virginia outside Washington, D.C.

There is a lot of info here, and you can also contact me with any specific real estate questions. And, at home consultations are available too.

My background… I’ve been an active licensed agent in Virginia for 25 years, work at TTR Sotheby’s International Realty in McLean, and sell homes in all price ranges. I donate to the Town of Vienna tree replacement fund, participate in a neighborhood citizens association, and try my best to stay in shape.

Let me help you: Email doug@dougfrancis.com or call me at (703) 304-6827 to discuss your plans. Cheers!

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About Doug Francis

I am a Realtor with TTR Sotheby's International Realty® just outside Washington D.C. in Northern Virginia. I have been a full-time Realtor licensed in Virginia since 1991, and cover a big territory specializing in the Vienna real estate market and custom homes for sale.

I have unique knowledge of digital real estate marketing, and my marketing starts here. My clients have been attracted to my results-oriented strategy for years, and I am accepting new clients for 2023 right now.

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