So you lost the home of your dreams to someone else. You may never know why. Maybe they offered more money or their terms were slightly better than yours. But it's not all bad news; in fact, there may be a silver lining here. You can ask the seller to accept your offer as a backup offer. It costs you nothing. You don't have to put out any money, yet you are in line to get the property if the current buyer falls out. Plus, sellers love backup offers because it puts pressure on the accepted offeree to close the deal quickly, knowing that there is another buyer standing in the wings hoping to take center stage.
I have won big in backup situations where there has already been an inspection and the house falls out because there are problems that the buyer can't handle. Or simply because the buyer was not able to get his loan. In this situation, I have the advantage of jumping in to save the day when the seller is now frustrated and just wants to sell and get out. It puts me in a stronger negotiating position.
If you do find yourself in a backup position, there are four things to include in a backup offer:
Four Backup Offer Must-Haves
1. Thirty-Day Time Limit-Make your backup offer expire after thirty days. The longer the time it takes to complete the current transaction, the greater the chance the two parties have to work through their differences. A time limit will force the hand of your competition, which may make them unable to close the deal.
2. Right of Refusal-You're not bound to take the property, but once they've accepted your backup offer, they are bound to ask you first.
3. Get the Terms in the Agreement in Writing-Lock those sellers into you. Make sure that they are obligated to sell to you within a certain period of time at the agreed-upon terms if the property becomes available.
4. Extra Bonus for the Backup Buyer-Legally the sellers have to disclose any problems the first-position buyers uncovered, maybe even ones that made them bolt! As a result, you will know the property's recently uncovered flaws ahead of time.
Michael Corbett is Trulia's real estate and lifestyle expert. He is also the host of EXTRA's Mansions and Millionaires on NBC. In addition to his regular segments on ABC's The View and Fox News, he is a national best selling author with three critically acclaimed real estate books:Find It, Fix It, FLIP IT!; Ready, Set, SOLD! and Before You BUY! His years of experience in buying, renovating, and selling homes have made him a sought-after nationally recognized real estate expert.