Back-up offers can benefit a Seller or a Buyer, depending on the situation. In a micro-market such as Aspen/Snowmass, it is not unusual for several offers to be submitted on a home for sale within hours or days of each other. Anything can happen next and the party that benefits depends on the experience and market savvy of the brokers involved. Gary Feldman of Gary Feldman Group at Aspen Snowmass Sotheby’s International Realty, with 34 years of experience selling Aspen’s finest luxury properties, has the expertise to successfully benefit his clients in these situations.
Recently, Gary represented the seller of a stunning property in Aspen. The seller received three offers at once after the home was on the market with no offers for several months. This is an example of market conditions creating simultaneous offers, in which the buyers all want the same property. When this happens, the advantage shifts to the seller and presents an opportunity to secure a binding backup offer. In this transaction, a backup offer was negotiated and signed by all parties. Most buyers negotiate from the position that no one else is interested in the property. This perceived advantage translates into a set of sometimes onerous contract contingencies, including due diligence and property inspections, that often result in a price reduction demand from the buyer. This advantage changes dramatically if the buyer is made aware that a backup offer is in place. Now, the buyer has to assume that the backup offer is as good or better than theirs and if they make any objections, the seller may allow their contract to terminate in order to accept the backup.
Back-up offers can drastically shift the dynamics of a sale. Gary has been involved in a transaction where Buyer #2 submitted a backup offer for significantly more than Buyer #1’s accepted offer. Buyer #1 objected and demanded a credit at closing unaware of the backup offer. When the Seller ignored the objection and Buyer #1 failed to rescind the objection, the Contract automatically terminated. Buyer #2’s contract then became valid.
When selling a home, it’s critical that sellers are represented by an experienced real estate broker. Multiple offers can seem great, but in the long run, it creates a series of complex negotiations. And, if you find yourself in a situation where there is a contract pending on a property that you want to purchase, consider submitting a backup offer. If you and the Seller execute a backup contract and Buyer #1 submits a costly inspection objection, hoping to get a significant price reduction, the Seller might not negotiate and allow Buyer #1’s Contract to automatically terminate. Then, your Contract would automatically be in force.
Whether you are selling or buying a home in the Aspen/Snowmass area, be sure to contact Gary Feldman. He has the expertise and years of experience to successfully work with multiple offers, and help you achieve the best situation possible. Call 970.948.3737, email [email protected] or visit our website.