If you’ve been searching for a home, you may come across a listing marked as Active/Backup or hear about the possibility of submitting a backup offer. But what does that actually mean? And why would a buyer or seller consider a backup contract?
What Is a Backup Offer?
A backup offer is a negotiated and accepted offer that remains in place while another contract is already in effect. If the first contract falls through for any reason, the backup buyer automatically and immediately moves into first position—without having to renegotiate or compete with other buyers.
How Does a Backup Contract Work?
- The Seller Accepts a Primary Offer – The seller has already accepted an offer from a buyer, and that contract is in first position.
- Another Buyer Submits a Backup Offer – If a second buyer is interested, they can submit a backup offer, which the seller may choose to negotiate.
- The Seller and Backup Buyer Agree to Terms – If both parties reach an agreement (the negotiation process is similar to that of the first contract), the backup buyer signs a contract, but they are not yet in first position.
- If the First Contract Falls Through, the Backup Buyer Moves Up – If the original buyer backs out, the backup contract automatically moves into first position, and the home is now under contract with the backup buyer.
Why Would a Seller Accept a Backup Offer?
Not every seller wants or needs a backup contract, but in some cases, it makes sense:
- If the first contract seems shaky – The initial buyer may have a home to sell or financing concerns. A backup contract provides a safety net.
- To apply pressure on the first buyer – Knowing there’s another buyer in place may discourage the first buyer from negotiating aggressively on inspection or other contingencies.
- To maintain momentum – If the first contract falls through, a backup offer means the seller doesn’t have to restart the selling process.
Why Would a Buyer Submit a Backup Offer?
From a buyer’s perspective, a backup contract can be a strategic move:
- It locks in the home if the first deal fails – Instead of competing in a bidding war later, the backup buyer is already in position.
- It allows buyers to stay in the game with minimal risk – A backup contract doesn’t usually require immediate earnest money or full commitment unless the first contract falls through.
Is a Backup Offer Always a Good Idea?
No, not always. Every situation is different, and a backup contract isn’t always the best move for either party.
- For buyers – You may not want to wait around for a deal that may never fall apart.
- For sellers – You may prefer keeping your options open rather than locking into a second contract.
That’s why we always evaluate the market, your goals, and the specifics of the situation before making a recommendation. If you’re considering making or accepting a backup offer, we’ll discuss the pros and cons so you can make the best decision.