Submission of a back-up offer is where the rubber meets the road. (Flickr photo by theilr)
Back-up offers exist in the gray area of real estate transactions.
Nobody likes them more than listing brokers and their clients.
For buyers, they represent a shred of hope that they can obtain the home of their dreams.
Buyer representatives submit such offers, as you must know, when encouraged to do so by listing brokers after an earlier offer has been accepted. Here in New York, the situation may arise even when the buyer — but not yet the seller — has signed a contract.
As one real estate blogger, Illinois broker Margaret Goss, complained recently about an offer she had made, the rubber met the road after the offer was submitted.
She said the listing broker suggested there was a window of opportunity in a transaction because the original buyers were “behaving badly” by loading in demands after acceptance. Goss related what happened next, paraphrasing the other side:
So, sure, bring us that offer – we’d love to see it and kick these unruly kids out of the running. So I diligently wrote an offer with my buyers — an excellent one — but we knew it was not a sure thing. When all was said and done, looked at and discussed, we lost out. The sellers were a relocation company that now had leverage — our offer — with which to turn the hand of Buyers #1. Those buyers complied by removing all their demands and got the house.
To frame the question baldly, were the second offerers used? If so, was it the listing broker or the seller who used them?
Buyers who make back-up offers always are in a weak position. No one guarantees them anything. They have no way of knowing whether their offer will become a device to force a better offer from the first buyer or whether it simply will sit there in the event that offer falls apart for some reason.
Should the second offer be better than the first and the first buyer improves that offer, the back-up buyer may receive a chance to match or exceed it. In other words, the back-up offer can create what every buyer dreads: a bidding war.
Where the situation becomes murky is the source of the back and forth. If it is the broker acting without the seller’s direction, then the broker’s ethics don’t pass muster. If it is the seller calling the shots, as required by law, such is life.
When it comes to responding to offers, the seller always has the last word.
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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022
M: 347-886-0248
F: 347-438-3201
Malcolm@ServiceYouCanTrust.com
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