What is a Backup Offer and Should You Make One?

If you’re in the process of buying a home, you may run across a pending listing that’s also accepting backup offers. You may be wondering what a backup offer is and if you can still make an offer on the home. 

In this Redfin article, we’ll tell you what to consider before making a backup offer and why sellers accept them. Whether you’re looking at homes for sale in Boston, MA, or condos in Orlando, FL, here’s what to know about backup offers.

What is a backup offer?

A backup offer is a secondary offer made on a home that’s already under contract with another buyer. It gives you a chance to step in if the original deal falls through. While the seller has already accepted another offer, they’re open to having a backup in place. 

This is in case the first buyer backs out due to financing issues, inspection problems, or a change of heart. If that happens, your backup offer could move into first position, potentially saving the seller time and hassle. 

How do backup offers work?

A backup offer works as a safety net for the seller and a potential opportunity for the buyer. If you’re interested in a home that’s already under contract, you can submit a backup offer to be considered next in line. If the seller accepts it, you may sign a backup contract, which becomes legally binding only if the original deal falls through. 

Until then, you’re not obligated to buy the home, and the seller isn’t obligated to sell it to you. If the first buyer backs out, your contract automatically moves into place, skipping the need to re-list the home or negotiate from scratch.

What is a backup contract?

A backup contract is a legally binding contract, usually including a deposit. That means if the original buyer falls through, the second buyer is automatically under contract to buy the home. Sellers may have one backup contract and additional backup offers. 

What to know before making a backup offer

• It gives you a chance at buying the home: In the case that the buyer exits the sale, your backup offer may be accepted. 
• Your offer is unlikely to lead to a sale: The NAR reports only 6% of home sales fall through. The Boland Team says, “One of the biggest misconceptions is that a property with an accepted offer is essentially off the market. In reality, many transactions never make it to the closing table, especially in markets with lengthy due diligence or approval processes. Buyers who submit a clean, well-qualified backup offer with strong financing and reasonable terms can be well positioned if the first deal falls through. That said, we still recommend continuing to look at other homes while you wait.”
• It may delay the homebuying process: If you have a backup contract, you’ll have to wait to see if the deal closes. If the first buyer backs out, then you’re contractually obligated to follow through on the home sale.
• The home may have issues: There are many reasons why a buyer may cancel the contract, including problems in the home inspection report. 

Eric Andrews, accredited land consultant and principal broker of Realty World Carolina Properties, says, “A backup offer makes the most sense when the property is difficult to replace because of its price, location, or acreage. Most buyers assume a property is ‘sold’ once it goes under contract, but a significant number of transactions never make it to settlement. Backup buyers need to understand this is a waiting game and may spend time hoping the first contract falls through while other suitable properties come on the market. If you submit a backup offer, make sure you understand exactly when and how it becomes the primary contract.” 

4 tips for making a backup offer 

1. Consult with your agent and ask them how many other backup offers are in line ahead of you. If there are several, the odds of all the buyers ahead of you canceling their contracts are slim unless there are serious problems with the property.

2. Make a competitive offer that stands out to the seller. You may want to offer a slightly higher purchase price, pay in all-cash, or reduce the number of contingencies. Adam Taylor & Team says, “Another misconception is that price alone guarantees the backup position. Sellers also care about financing strength, clean terms, and the likelihood of closing. Buyers can improve their chances by submitting a strong pre-approval, keeping contingencies reasonable, and presenting a well-structured offer that signals reliability. A well-prepared offer often matters just as much as price.”

3. Consider an escalation clause, which means that you’re willing to raise your offer price if additional higher offers come in.

4. Include an inspection contingency to ensure that if your offer is accepted, you can still back out if something is wrong with the home. It’s possible that the original buyer backed out due to issues uncovered during the home inspection. It’s possible that the original buyer backed out due to issues uncovered during the home inspection.

Hamilton & Co says, “We don’t recommend waiving important contingencies just to stay competitive. While some contracts fail because of financing, others fall apart after inspections reveal major issues. Buyers should protect themselves by keeping inspection and financing contingencies while making the rest of their offer as strong as possible.” 

Should you make a backup offer?

Yes, if your circumstances allow. If you’re not in a hurry to buy and you’ve found a home that you love that’s accepting backup offers, it doesn’t hurt to try. But if you need to move quickly, submitting a backup offer may not be the best option.

Sallie Simmons, Realtor, says, “When writing a backup offer, buyers have to be intentional about their timelines and contingencies because if their offer moves into first position, things happen quickly. Buyers should make sure their lender can meet the contract deadlines, their earnest money is fully liquid, and everything else is lined up so there are no delays once the first contract falls apart.

I’ve also found that many buyers mistakenly think they’re locked into waiting on one home, but that’s not the case. They can continue looking at other properties and withdraw the backup offer if something better comes along. A clean, realistic offer that’s ready to perform gives buyers the strongest position if the opportunity opens up.” 

FAQs about backup offers

Can a buyer or seller withdraw from a backup offer?

If you don’t have a backup contract, buyers and sellers aren’t obligated to follow through with a backup offer. So, you can back out of the offer as needed. 

Why would a buyer back out of a contract?

Buyers cancel contracts for a variety of reasons, such as major issues uncovered during a home inspection or the inability to secure financing.

Why do sellers accept backup offers?

A seller may accept backup offers as reassurance. If the buyer backs out of the sale, they won’t have to put the home back on the market.