Our recommendation is not to take a backup offer and here is why.

When you take a backup offer, you as the seller have locked yourself into accepting that offer should your current escrow fall out. You could get an all-cash offer for a higher amount and it does not matter, you have given up the right to take a better offer.

However, the buyer in the backup position is not locked in at all. They can cancel at any time, and as a matter of fact, even if they have lost interest in your house, they do not have to cancel, they could just leave it in place and when you finally put them into escrow they still have the 7 to 12 day inspection period to cancel for any reason.

It also excludes you from going out to multiple buyers if you fall out of escrow to see if you can get a higher offer. Many times when buyers have another chance to buy a property they will increase their offer as they know last time they were too low.

I heard of one situation where the seller regretted putting an offer in a backup position because they have a higher cash offer. Now the seller is trying to get around taking it by withdrawing the listing and a lawsuit was filed by the buyer saying the seller must take their offer.

So in my opinion, why exclude yourself from taking a higher offer, and lock a buyer into a backup position, when they have no obligation to you and can cancel at any time.

You might wonder why some Realtors recommend taking a backup offer. They recommend taking it because it is better for them, not for you. They know if the current offer falls out, they don’t have to do any work as the backup offer automatically goes into escrow, and you can’t change Realtors. Once a backup offer is in place they lock their commission into place, even if they mishandle your current escrow and it falls out.

They are not recommending this because they think it will get you the highest-priced offer should you fall out of escrow. They know you are being locked in to the backup offer and can’t accept a higher offer even if it is all cash.