Secondary Offers

Owners who accept offers contingent on the closing of a buyer’s real estate (commonly called a sale of home contingency) typically have a provision in that offer allowing them to accept “Secondary Offers”. The secondary offer attractive to a seller is one that is reasonably similar to the offer they have and more certain to close.

A buyer who makes a secondary offer is wise to give the seller at least a few days to untangle themselves from the primary accepted offer. By agreeing to “sit tight”, promising to not withdraw their offer for  a set number of days, the secondary buyer gives the seller the time they need to force their buyer to make a decision to commit or step aside. We won’t know the number of days the seller needs to wrap things up with the first buyer, but we can assume it is at least 3 days. The more time the seller is given the more attractive the second offer becomes.

A well prepared secondary buyer will provide a know questions left unanswered pre-approval letter  or proof of funds available to close. The more risk the buyer assumes, the more likely the seller is to find the offer attractive enough to attempt to let the first buyer go and get into business with buyer two.

There is no certainty in becoming primary by having an accepted secondary offer. While somebody may suggest the seller is able to move a secondary buyer to primary, be cautious. The primary buyer does have some leverage to maintain their position. Secondary buyers who are made primary, should require proof that the seller is free and clear from buyer 1. A cancellation and mutual release agreement signed by all parties may be sufficient proof. A licensee who participates in moving a secondary buyer to primary position without a cancellation and mutual release from the first buyer is in a perilous position.

 

 

 

 

 

 

Author: Tom Meyer Real Estate Broker, Madison, WI

I believe the difference between an accepted or rejected real estate offer to purchase is the drafter's ability to customize the Offer to reflect the Buyer's commitment. Ready, willing, capable, committed, sincere people can out negotiate higher priced offers by moving away from standardized forms. Ask me how.

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