If you are going to put in a backup offer, it should be an offer that makes the seller swoon.
A backup offer is an offer a buyer submits even though a property is already under contract with another buyer. If the buyer with the contract in first position terminates the contract then the backup offer would go into effect.
In Colorado, once a seller is under contract he/she can’t legally get out of it. The only way out of the contract for the seller is to try to get the buyer to terminate by not being cooperative – not negotiating with the buyer on inspection, extending dates and deadline for the buyer, etc. Therefore, a backup offer should try to incentivize the seller to not be amiable with the buyer – entice the seller to try to force the breakup, if you will.
So, how do you become a contract-wrecker with a backup offer? Submit an offer with a higher price and/or better terms than you believe the contract in first position has.
If your backup offer doesn’t impress the seller not only do your chances of getting the property not greatly increase, your chances might actually go down. A seller could use a not-so-good backup offer as a negotiating tool with the buyer they are under contract with. Once a buyer in first position knows that a backup offer is in place they tend to ask for less from the seller – making it harder for the seller to force a termination.
So should you submit a backup offer? My answer is yes, but only if you are willing to sweep the seller of his/her feet.
Good Good is a Boulder area real estate agency. We specialize in helping good people find the perfect Boulder home. We’re low pressure but high touch. If you’re looking for a real estate guide in the Boulder area, we may be a good fit. Give us a call if you’d like to chat. We’re always happy to answer any questions you have about the Boulder area or give you a tour.
Katie (Good Good Founder) | 720.415.4914 | Katie@goodgoodrealty.com
There is no standard equation for offers on properties in Boulder.
Sometimes offers are due in immediately, sometimes the best strategy is to wait to put in an offer. Sometimes the offer needs to be 10 percent above the listing price, sometimes, though not often these days, 10 percent below will suffice.
Every situation is different – a real estate transaction is very fluid. But here is generally what to expect when you find a place you want to call your own:
- You walk into a house and you feel at home. You want it.
- I (assuming I am your real estate agent) call the listing agent and ask the following questions: When will the sellers be looking at offers? Do you have any other offers in hand. If so, are those offers above asking price? Cash? What else can you tell me about the offers? Would anything besides price be enticing for your sellers – a fast close, a rent back, etc.? What else can you tell me?
- I work up a comp report and email it over to you so that you can see the most recent, like-kind properties that have sold in the immediate vicinity of the subject property. I also include a dissertation dissecting the comp report for you so that you feel confident that you know what the property is worth.
- I call you to see if you have any questions about the comp report and to tell you what information I extracted from the listing agent. From there we discuss a game plan for an offer.
- I write up the offer that we discussed and either send it over to you via Docusign (a software program that enables you to sign remotely) or we get together to go through the offer before you sign – whichever you prefer.
- You email me your pre-approval letter from your lender (blog post about this is in the works) or your proof of funds if you are a cash buyer – a bank statement or a letter from an accountant.
- I send the offer and financing information over to the listing agent.
- We eagerly wait for a response. There could be several possible responses – the sellers just sign the offer (woohoo!), the sellers send a counter offer over to us, the listing agent calls and tell us multiple offers ended up coming in or the seller would like x,y or z…and gives us a second chance to resubmit. Plan on hearing from me a lot during this waiting period.
- Hopefully you get under contract and the contract process begins.
Good Good is a Boulder area real estate agency. We specialize in helping good people find the perfect Boulder home. We’re low pressure but high touch. If you’re looking for someone to guide you through the real estate process in the Boulder area, we may be a good fit. Give us a call if you’d like to chat. We’re always happy to answer any questions you have about the Boulder area or give you a tour.
Katie (Good Good Founder) 720.415.4914 | Katie@goodgoodrealty.com