Market Wise Q&A from the San Jose Mercury News: Can We Submit a Back-up Offer Directly to the Bank?


Pat Kapowich for the San Jose Mercury News  

Q: My husband has tried make appointments to meet with listing agents to write backup offers on their short sale listings.  He knows that the listing agents will receive twice the commission if they represents us as buyers.  That alone should motivate the listing agents to represent the sellers and us.  The fact the listing agents will be insiders when any buyers in first position are faltering will put us at an advantage.   Considering many short sale transactions fall apart, he feels this could be a way to buy a home.  

But the process has not gone well.  So far the listing agents have refused to write backup offers. Most said a backup offer will only add extra motivation to the current buyer who is under contract to perform. Another listing agent claimed he is under no obligation to represent us in writing a backup offer.  Can we submit a backup offer directly to the bank?  If so, do the buyers in first position need to be told there is a backup offer in place?




A: First, offers are submitted to the sellers and approved by the bank(s).  Secondly, real estate attorneys tell you that appealing to the greed of anyone in the sales arena is not the ideal scenario for choosing representation.  Attorneys will roll their eyes at an outsider trying to get through to the proper decision makers at financial institutions.  Keep in mind; many short sales have two loans, which translates to multiple lenders. Real estate attorneys, sellers and listing agents have a hard enough time dealing with financial institutions when they are parties to short sale transactions. Surely all parties would  frown upon all outsiders sidestepping the sellers and their listing agents.


Buyers under contract in first position do not have to be informed there is a backup offer.  Despite that, most listing agents solely representing the seller would shrewdly explain through the buyers’ agents that a backup offer was accepted.  Conversely,  your husband is planning on hiring a dual-agent while a short sale transaction is underway and anticipating that the sale will fall apart.  He’s hoping on being bumped to the first-position buyer. All of which is predicated on finding the perfect match of a greedy listing agent and a shaky short sale transaction.  Perhaps it’s your turn to develop a realty strategy.


Pat Kapowich Certified Real Estate Brokerage Manager (CRB) REALTOR®, ABR, CRS, GRI & SRES Home Sales Expertise and Experience (408) 245-7700