Accepting Backup Offers? Usually Not
Many home buyers have browsed the internet one time and saw an amazing property that says it’s accepting backup offers or under contract. A rush of optimism runs through you and you want to see it right away. I’m here to tell you it’s not worth it, swipe left and move on.
These are several different descriptions for announcing to the public that a property is officially in escrow. No matter how you say it, a property that is in escrow basically translates to: it’s no longer available for sale. The seller has legally accepted another offer and the home is off the market so move on and keep searching.
If a property is in escrow and therefore no longer available for sale, then why do agents put a status of “Accepting Backup Offers” or “Under Contract”? The answer is 1) agents have to choose from a list of property status options other than just “Escrow” in their MLS (Multiple Listing Service) and 2) agents want to get as many backup offers as possible.
Agents change the status of property after they accept offer to inform the public that it’s off the market. Those agents have to click on whatever property status box it provides, which forces agents to be more specific than just using an umbrella term of Escrow. Whether it’s “under contract” or “pending”, it varies because each MLS across the US is different. A different MLS means a different way of describing a property that is in escrow. The more specific statuses is meant for other agents consumption and not for the public who will get confused.
The second reason is that sellers want as many backup offers as possible. Of course it is a prudent decision for sellers to have a plan B, C or even D. So the seller’s agent will always tell other buyers that you can and should submit a backup offer if you want. What do they have to lose? Absolutely nothing. But my experience is that it’s not worth it for buyers to submit a backup offer because if an escrow cancels, the seller just puts the property back on the market for everyone to compete on again despite have backup offers lined up from the first time it was on the market. They want to put it back out there a second time to fish for an even better offer.
Buyers are often confused yet optimistic when they see a property for sale with a status of “Accepting Backup Offers”. After they see a home that is accepting backup offers they usually call me and ask: “that means we still have a chance, right?” The answer is yes, but the reality is that it is very, very unlikely that your backup offer will get selected. Buyers and their agents can be more efficient with their time if they move on and search for other options. Happy home hunting, folks!