Can I put in an offer on a house that’s under contract?
Can you put in an offer on a house that’s under contract? Yes, you can submit a backup offer.
What do you do if the house that you have been watching and are in LOVE, LOVE, LOVE with suddenly goes under contract? You submit a backup offer to the seller and hope the first buyer terminates the contract so you can become the primary buyer.
What’s a backup contract? A backup contract is an executed contract that is in the second position. It becomes the primary contract if the first contract is terminated.
How does a back-up contract work? You negotiate with the the seller as if the current contract did not exist. A back-up contract addendum is made part of your executed contract. Even though you are in a backup position, you must still provide the earnest money and the option fee to the title company and to the seller. Both checks will be deposited / cashed. Now you sit back and wait to see if the buyer of the first contract terminates.
If the buyer of the first contract terminates, your contract becomes the primary contract and you proceed forward with fulfilling the obligations of that contract such as having the property inspected, ordering an appraisal, and securing a loan.
If the buyer of the first contract does not terminate the contract and closes on the Spring TX house, your earnest money will be refunded to you but the option fee is not refunded. As such you want to negotiate a lower option fee as this is the cost of back-up contract.
If you were willing to pay the seller more than the buyer of the first contract, can the seller terminate the contract? Unfortunately the answer is NO. The buyer can terminate the contract but the seller can not terminate the contract. The seller can attempt to persuade the buyer of the first contract to terminate by being less willing to negotiate repairs with the first buyer. But even if you were willing to pay the seller more for his Spring TX house than the first buyer, the seller can not terminate the first buyer’s contract.