Home Buyer Negotiations: Is There Ever A Good Time To Be In A Backup Situation As A Home Buyer?

In this changing Real Estate market there are time when backups are common and times when they are not. Still the fact remains that as a home buyer for real estate, it's rarely a good position to be in as a backup.

Now that the mortgage restrictions are heavier and ever changing, the number of contracts that fall through is more indictive of an inexperienced agent. What I mean by that, is that inexperienced agents will be more likely to let their clients make offers on a property than an experienced one.

Again, in any case, it's a precarious position to be a backup, especially since Real Estate transactions are very much on an organic timetable. With the number of homes on the market, it's surprising how many of the "best" ones still get a few offers, albeit, not always at once.

There are things you can do, especially in Georgia, to protect clients and still allow them to have a shot at their favorite home.

The easiest way to accomplish this in Georgia is to simply extend the due diligence period to allow enough time to pass to see whether the buyer in first position will be shaky. In some cases, a due diligence period may need to be extended to the closing date of the first buyer.

The due diligence period in Georgia Real Estate, allows the buyer to kick the tires, but it also allows them to withdraw for very many reasons. In addition, there is an option that allows buyers to disclose that they may be trying to purchase another property. This is a beautiful option for buyers and probably the only situation where a seller would be happy to see a long due diligence period and that box checked.

There are other ways to have a good backup for a buyer that will likely be nationwide:

1. Special Stipulations - You could easily state that the backup buyer has the right to terminate with a given time period and has the right to make offers on other properties. In addition, you could even write in that the buyer must give notice to the seller or not.
   
   Be careful with special stipulations. Even though they give the Realtor (or offerror) freedom to write whatever they want, it doesn't always hold up in court. If it matters, check with your Broker or Real Estate Attorney to make sure the wording is right.
   
2. Contingencies - Most often we think of contingencies as having to sell first or in a huge up market having to find a home first. In addition, there are financial, appraisal and inspection contingencies to name a few. Why not have a backup contingency?
   
   This offer is contingent on the first offer falling through AND the buyer not finding another property to bid on. Make sure it's clear that the buyer can terminate it (to protect your buyer) and that there is a specific time period for things to happen such as, execution of contract or termination due to the length. Again, a provision for the buyer to locate and make offers on other property will work best here. Also, again, since most standard contingency forms do not have these additional protection provisions for buyers, you may want to check with a Real Estate Attorney to ensure proper wording.

Whenever possible, buyers should be able to use the due diligence period of the contract as backup protection. If the Seller does not agree then there are other options albeit less desirable.

What happens if as a buyer you don't take these steps to ensure manueverability?

Simply put, you're stuck! Until the home closes or the buyer in first position falls out, you as a home buyer are stuck in backup position in a Real Estate market flooded with inventory.