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Backup offer refers to an existing offer not accepted by a seller in the real estate scenario. This offer that was not accepted earlier becomes a kind of secondary offer. In order to accept this secondary offer, the seller has to cancel his or her primary contract first as the seller has already accepted one offer. Since these offers increase the chances of property sale they are useful to the sellers. The reason is that these offers are completed and closed. Locations like in-town locations, country clubs or neighborhoods have high desirability factors as the buyers in those areas are more than the sellers. These offers are usually very common in such locations. Below are answers to few of the more common questions about backup offer: In Colorado I purchased a HUD home. I signed an agreement where it is mentioned that this property would be my primary residence. Now I am thinking of turning it into a rental property since the circumstances have changed. However, by changing the status of my property, I would have it lost to a backup offer. Is it possible for HUD to check on me as to how I am using my home after the deal is closed?
Usually, HUD does conduct some random checks very often on these loans. There were situations where innocent people were caught by HUD. There was a change in their circumstances when they received loans on properties, which they thought would be their primary residences. Therefore, it would be best to legally inform HUD that your circumstances have changed instead of them finding it out. This is because if they come to know about your changed situation, they would charge you with a felony of fraud as you did not notify them about your change of residence status. Moreover, you would not be able to get any money on any claim from your insurer if they discover that the property is not your primary residence, even though it was stated so earlier. There was already an accepted offer on the foreclosure property that I made an offer on. I came to know of it once the offer was made. I was hoping if I could present that offer as a backup. But my agent mentioned that the banks are not ready to take up any such offers like that. Is there a way I can prove that even the bank did not consider my offer?
In such a case, you may ask for evidence but it seems unlikely the bank would provide it to you. You could insist your agent on giving you the proof if you think he or she had something to do with it. You can however contact the agent’s managing broker and request for the evidence again by stating your concern, in case you fail to get it. In a short sale in Kentucky, if there is a larger backup offer, then would the first offer get the first right of refusal?
In a short sale, you do not get the right of first refusal, if your offer does not get accepted and there is already a backup offer which has been presented. You may however, get the first refusal if there is a condition mentioned specifically for that in the sale contract. These types of offers could be used cleverly by sellers. For instance, such offers could be presented as an “as is” or “secondary offer wins” case if a seller discovers that there are problems with the property after the property inspection has been performed, which the seller was not informed about and has a backup offer. Such a case would make the original buyer complete the sale. Usually, such an offer would pose no risk to a primary buyer if the buyer executes all the obligations correctly. Generally, a person can close a property sale in spite of having a backup offer. If you need any clarification about your particular situation with respect to a backup offer, you may wish to ask a real estate lawyer for legal insight based on an expert evaluation of your circumstances.
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