When purchasing real estate, there is a secondary contract that cannot become the primary unless certain conditions apply. This secondary agreement is also known as a backup real estate contract. In order for this agreement to take the place of the primary, the primary contract must be null and void. This action can happen by choice or the buyer’s inability to complete the deal due to problems from the property inspection, personal reasons, or finance issues.
There are a few questions that arise when talking about this secondary agreement, such as can it be used in place of the primary? Other questions involve the benefits of this contract as well as any risks.
Can the backup real estate contract be used in place of the primary?
A backup real estate contract is an unaccepted offer. This agreement cannot be accepted unless the primary offer is null and void. Once this occurs, the seller is free to accept any backup offers.
What is the benefit of having a backup real estate contract?
Backup real estate contracts are beneficial to sellers because it increases the chance that their property sale will close. These secondary agreements are more common in areas of town that are desirable. The areas can include country clubs and in-town locations. In areas where there are more buyers than sellers, you will also find more backup real estate contracts.
For sellers, a backup real estate contract can be valuable if the primary agreement was taken as a possibility, but is not certain. When selling the buyer’s current home, the contract is contingent. In this situation, the seller can agree to accept the offer, but may include a kick-out clause. This clause requires the buyer to remove a contingency in a certain amount of time if an acceptable backup real estate contract is offered.
A backup real estate contract can also be used as a bargaining tool. For example, let’s say a property inspection points out unknown problems to the seller. If there is a backup real estate contract, the seller can use this to present a deal with the buyer. The buyer can take the property as is or the secondary offer goes into effect. This presentation usually convinces the buyer to go ahead and close on the deal from the primary agreement.
Are there any risks from having a backup real estate contract?
If buyers complete their obligations properly from the primary agreement, there is no risk. The closing on the property sale will be finished whether or not the backup offer exists. For more information on buying and selling homes, contact the Elite Real Estate Group in Amarillo. Give us a call today at (806) 337-0883 or Contact Us via email. You can also view our listings to see the homes we currently have available in the Texas Panhandle area.