The Anatomy of a Back-Up Contract

Post written by Chuck Braxton, REALTOR® GRI, Roche Realty Group, Inc.

This article has been prepared for buyers and sellers of New Hampshire real estate to provide an overview of the back-up offer what it is, how it is used, and the benefits it can provide.

The Offer: In New Hampshire, making an offer for real estate is a one-step process. That is, the terms put forward to a seller by a buyer on a New Hampshire association of Realtors form entitled, Purchase & Sales Agreement (referred to as the “P&S”), if accepted without changes by the seller, becomes a binding contract on both parties.

The Counter Offer: If changes to the offer are made by either party, this is a “counter offer.” When either party makes a counter offer, then the other party is not bound by the terms of their prior offer unless such changes are accepted in writing by them. It is important to note that went both parties’ signatures are on a counter offer that is a binding contract. The changes on that counter offer and the other terms in the initial offer referenced in the counter offer are binding on the buyer and seller. The terms of counter offer and referenced offer may be merged in a so-called clean original that both parties then sign as part of the permanent record.

The Back-Up Offer and Back-Up Contract: A Back-Up Offer works this way. After a seller has accepted a P&S and entered into a contract with one buyer, another buyer (the “back-up buyer”) can make a so-called Back-Up Offer. A Back-Up Offer contains all of the desired terms (price, closing date, financing, inspections, etc.) the same as any P&S. However, there are a couple of additional clauses.

First, a Back-Up Offer contains specific language saying that the offer, once accepted by the seller, is in back-up position and, if the first contract fails for any reason, the seller and buyer agree that this back-up contract shall move into first position. Second, a Back-Up Contract may provide that the back-up buyer can withdraw from their contract for any reason and receive a full refund of deposit at any time prior to having the Back-Up Contract move into first position.

The Back-up Contract may also provide that the seller will have to notify the back-up buyer when their Back-Up Contract is about to move into first position. Once the seller has provided that notice, the backup buyer has a short period to acknowledge that the Back-Up Contract is in first position.

Although the seller and back-up buyer sign a P&S agreeing to the terms, the timeline starts when Back-Up Contract moves into first position based on notification by the seller acknowledged by the back-up buyer. Note that the Back-Up Contract is a binding, signed contract subject to the primary contract being declared null and void. The seller could accept more than one Back-Up Contract provided the sequence of Contracts becoming effective is clearly spelled out in each.

The Back-Up Contract: Once a back-up buyer and the seller agree to terms, the back-up buyer’s deposit is cashed and held in escrow. Prior to moving into first position, if so stated the back-up buyer can withdraw with deposit refunded. If the primary contract closes, the back-up buyer gets the deposit back, too.

Moving Into First Position: If the Back-Up Contract provides for seller notification and buyer acknowledgement, then when the primary contract falls apart, the back-up buyer has one more chance to walk away. In any case, once the Back-Up Contract moves into first position, then the terms of that contract take effect and that contract moves towards closing.

Considerations in Making into a Back-Up Offer: One reason to accept a Back-Up Offer is that the current market conditions tend to produce deals with greater uncertainty. The primary contract may be contingent on the sale of other property or have contingencies for inspections and financing. New regulations have tightened lenders’ criteria. A Back-Up Contract reduces seller’s risks.

Perhaps the best time to make a Back-Up Offer is shortly after a property goes under agreement (or ‘contingent’). Realistically, a Back-Up Offer is not a time for a buyer to expect a low-ball offer or weak financing to get serious consideration from a seller. However, for appropriately priced properties that the buyer feels represent good value, a Back-Up Offer near or above asking price may make sense as this is a low risk way to get access to a desirable property before it comes back onto the market. If you are considering making a Back-Up Offer, discuss specific alternatives for your situation with a REALTOR®.

About the Author: Chuck Braxton is a REALTOR® with the Meredith office of Roche Realty Group, Inc. He has applied his 25+ years of experience as a business executive to the challenges facing sellers and buyers of real estate in the Lakes & Mountains Region.  His website is www.ChuckBraxton.com . Mr. Braxton may be reached at 603/677-2154 or toll-free at 800/926-5253 ext. 342 any time of day or evening, or by email at cbraxton@metrocast.net.

Share on facebook
Share on twitter
Share on google
Share on reddit
Share on pinterest
Home Maintenance - Person repairing wall in house

Home maintenance the difference between sold and stuck

Be honest… is your home in need of some repairs? Because the truthful answer to …

Read More →
Coins stacked up indicting inflation

Is our Current Inflation “Transitory?”

The Federal Reserve officials have described the current period of high inflation as “transitory.” In …

Read More →
ABBA Tribute performing at the Lakeport Opera House

Meet you at the Lakeport Opera House

Last Saturday, Nancy and I were invited to the Lakeport Opera House to take in …

Read More →
Picture of

The New Hampshire Advantage

All of us who live in New Hampshire’s beautiful Lakes Region certainly have lots to …

Read More →

Just like vacation seasons, vacation homes come and go

When you think about it, all homes are actually seasonal properties. Whether it’s a primary …

Read More →

Hunt for lower prices like a lone wolf

If you ever watched Saturday morning cartoons back in the day, you may recall Looney …

Read More →
Birds eye view of Lakes Region New Hampshire

Lakes Region Real Estate Market 6-Month Comparison

We are halfway through 2021 already, and as we head down the second-half stretch, I’ve …

Read More →
The "Village Store" in Gilford, NH

The “Village Store” in Gilford Has New Owners

Gilford— The “Village Store” in scenic Gilford Village, a Lakes Region landmark since 1836, was …

Read More →
Lakes Region NH - aerial view of Lake Winnipesaukee NH

Lakes Region Waterfront Sales Comparisons

I thought I would look at the real estate activity on the Lakes Region’s four …

Read More →
Island Living on Lake Winnipesaukee in NH - aerial view of Welch Island, Lake Winnipesaukee

Island Living on Lake Winnipesaukee

The thunder of motorcycles has arrived in the Lakes Region. After a long year of …

Read More →
summer fun in nh - swimming in the river

Summertime Adventures Around the Lakes Region

Memorial Day weekend has arrived, and all of us are excited to kick off the …

Read More →
Are we in a real estate bubble?

Are We in A Real Estate Bubble?

Back in April, the red hot search on Google™ was “when is the housing market …

Read More →

Roche Realty Group Sells Artie’s Subs & Pizza

Moultonborough, NH – Brian and Kara Dillard of Barrington, New Hampshire, have recently purchased Artie’s …

Read More →
Laconia, NH - City on the Lakes

Laconia— City on the Lakes

The 17,000 resident, “City on the Lakes,” is nestled on the shores of three of …

Read More →
Housing Bubble

What if it’s not a bubble?

It’s a mad mad mad world of real estate right now.  The frustrations of buyers …

Read More →
Alton, New Hampshire on Lake Winnipesaukee

Alton’s Treasures — Natural Resources

Alton, New Hampshire is a scenic community with wonderful natural resources. The town envelopes the …

Read More →
Moultonborough, New Hampshire

Moultonborough, NH — Low Taxes Attract!

Moultonborough, New Hampshire, is a scenic and idyllic community on the northern shores of Lake …

Read More →
Gilford, New Hampshire on Lake Winnipesaukee

Gilford Recognized For Its Quality of Life

Gilford, New Hampshire, has always been a popular destination and a great community to live …

Read More →
Meredith Village on Lake Winnipesaukee, New Hampshire

Meredith, NH—One of the Top 10 Best Small Towns on the East Coast

It’s always good to see our local towns highlighted in national publications, and recently Meredith …

Read More →

Economic Concerns for Real Estate

For the first time in decades, fiscal and monetary policy will likely remain easy during …

Read More →
The Ledges on Newfound Lake

The Ledges at Newfound Lake

     It is always with mixed emotions how we view the development of our natural areas. …

Read More →
Lakeview Golf Club in Belmont on 172 Acres Sold by Roche Realty Group

Lakeview Golf Club in Belmont on 172 Acres Sold

Belmont, NH- The beautiful 9-hole Lakeview Golf Club located at 89 Ladd Hill Road in …

Read More →
Nutmeg Inn in Meredith NH Sold

Nutmeg Inn in Meredith Sold

Meredith, NH- The historic country Nutmeg Inn located at 80 Pease Road in Meredith has …

Read More →
Housing Inventory Lacking - Lake Winnisquam, NH

New Hampshire’s Four Largest Lakes Lack Inventory

As we’re nearing the 1st quarter of sales activity in the Lakes Region, I thought …

Read More →
Lakes Region Real Estate Market - View of NH Lakes

Real Estate Tidbits in The Lakes Region

Here’s a quick update on the market and a few things I’ve observed that will …

Read More →

Roche Realty Group sells “The Anchorage at the Lake” Resort on Lake Winnisquam

Tilton, N.H. – “The Anchorage at the Lake” Resort located on Lake Winnisqaum and Route …

Read More →
New Construction in the Lakes Region

New Construction and Re-Sale Housing Dilemmas

I’ve seen a considerable amount of new construction and home remodeling taking place in my …

Read More →
Lakes Region NH

Lakes Region Market Competition is Fierce

We are now entering March, the unofficial beginning of our Spring Selling Season. We have …

Read More →
Home inspection report

Reasons Why You Should Not Waive a Home Inspection

We have a very competitive real estate market here in the Lakes Region due to …

Read More →
Photo of homes in New Hampshire's Lakes Region

NH’s Housing Inventory Needs One Thing — LISTINGS

This week I’d like to provide you with a summary of what New Hampshire’s Real …

Read More →
Wicwas Lodge and Lakeland School Property

Roche Realty Group sells the historic Wicwas Lodge / Lakeland School Property

Roche Realty Group, with offices in Meredith and Laconia, recently sold the Lakeland School property …

Read More →
Night picture of Laconia NH

Lakes Region—One of the Countries Hottest Neighborhoods in 2021

Imagine it’s Super Bowl weekend and there’s not a chicken wing or a pizza to …

Read More →
Hiking in New Hampshire

New Hampshire, Vermont, and Maine Peak Attractions

In my younger years in school, I always loved geography as a subject. Living in …

Read More →
Moving day

How to hand your home over to its new owner

Remember your first home? Whether it was a freshly painted rental or your first investment …

Read More →

Roche Realty Group Reports Sales of $146.5 Million for 2020

Frank Roche, President of Roche Realty Group, Inc with offices in Meredith and Laconia, has …

Read More →
Lakes Region NH vs San Francisco, CA

“Lifestyle Finder” For Your Move to or From The Lakes Region

Some studies place moving to a new location as one of the top ten most …

Read More →
Lake Winnipesaukee, NH

Winnipesaukee, Newfound and Squam Lake Accolades

Winnipesaukee, Newfound and Squam Lake Accolades It’s always fun to read articles where Lake Winnipesaukee …

Read More →
Kevin Shaw - Roche Realty Group

Kevin Shaw of Roche Realty Group is Top Producer for 2020

LACONIA — Frank Roche, president of Roche Realty Group with offices in Meredith and Laconia, …

Read More →
Center Harbor, New Hampshire

Jaw Breaking Price Increase in 2020 vs. 2019

Last week I pulled up comparisons on year to date sales of waterfront homes on …

Read More →
NH Lake Sales Activity - picture of lake with mountains and homes

Lakes Region Waterfront Sales 2020 vs. 2019

We’re getting near the end of the year, and I thought I would pull up …

Read More →
condominiums on lake winnipesaukee nh

No Better Time to Sell Your Home

We’re heading into the holidays, and all the local Realtors® are busy. They are out …

Read More →
Real Estate News Headlines - Lakes Region NH

Real Estate and Market News

There’s a lot going on out there in the marketplace. So much in the news …

Read More →
Picture of NH condominium home with pool

Affordable Housing is Always in Demand

There’s a lot of talk lately about the lack of affordable housing in the Lakes …

Read More →
Kitchen renovation

Small Improvements Make a Big Difference

During this past spring and summer, a large number of homeowners throughout the Lakes Region …

Read More →
Sales Volume and Prices of Luxury Homes Raising Nationally

Sales Volume and Prices of Luxury Homes Raising Nationally

Many national headlines are talking about the booming high-end vacation home market, in addition to …

Read More →
Support Small Businesses

Are we seeing a retail apocalypse?

During this past summer, I have been talking mainly about the exploding residential real estate …

Read More →
House and cash on a balance scale

Tips for Buyers in a “Seller’s Market”

We are currently experiencing a strong seller’s market here in the Lakes Region. 2020 has …

Read More →
Randy Miller Joins Roche Realty Group

Randy Miller Joins Roche Realty Group

Frank Roche, President of Roche Realty Group, Inc. with offices in Meredith and Laconia, is …

Read More →
New Construction in the Lakes Region

Lakes Region Construction Activity Update

It has been a wild summer out here in the Real Estate industry!  I thought …

Read More →
The Opera House in Laconia NH

The Vision behind the “Opera House” Renovation: Revitalization of the Lakeport Area

There is a lot of excitement brewing in the Lakeport area! Previously shuttered for decades, …

Read More →

Leave a Comment