How to Handle Back Up Offers

Question

I am the Listing Agent. My Sellers are currently under contract with Buyer A.  Over the weekend, another Agent submitted an offer from Buyer B.  Buyer B’s offer is a cash offer (Buyer A’s offer is a financed offer) and Buyer B’s offer is higher than the current contract with Buyer A.

What should I do?

Answer

This sounds like a “back-up offer” scenario.

A strict reading of La. R.S. 9:3893, indicates you must submit Buyer B’s offer to your Sellers.

However, since your Sellers are currently under contract with Buyer A, it would not be wise for your Sellers to “accept” Buyer B’s offer. If Sellers accept Buyer B’s offer, they run the risk of being under contract to sell the same house to two, different Buyers at the same time – not a very good idea!

(As a side note, if there is some qualifying language in Buyer B’s offer confirming Buyer B’s offer is not effective unless and until the contract with Buyer A is formally canceled by Buyer A, then “maybe” your Seller could accept this offer. But even with this language, I still hesitate to mention it as an option for fear of the consequences that might arise from Offers that don’t get the language correct!).

Instead, it might be wise for you to request Buyer B structure his offer to remain open until the contract with Buyer A is either closed or canceled. In this option, Sellers will not sign Buyer B’s “offer.”

In order to present an offer that remains “open,” Buyer B could either:

  1.  Structure his/her offer with a long time-frame in which the offer will remain “open” (i.e. several weeks); or

2.   He/she could choose not to put a time-frame on the offer and make it a “revocable at any time” offer.

 

Option #2 allows the Seller more flexibility to rescind the offer at any time prior to your Sellers accepting the offer in case Sellers locate another house while they wait on whether the contract with Buyer A will close or be canceled. So, be prepared for Buyer B to choose Option #2 above.