Can You Make an Offer on a House Under Contract?

Finding a desirable home can be challenging when it’s already under contract. While many buyers feel their opportunity has passed, “under contract” doesn’t always mean a closed door. Specific strategies allow motivated buyers to pursue a property that appears off-market, offering a path to securing a desired home.

What “Under Contract” Means

When a home is listed as “under contract,” it signifies that a seller has accepted an offer from a buyer, and both parties have signed a legally binding agreement. This agreement outlines the terms of the sale, but the transaction is not yet finalized. The period between an accepted offer and final closing is often characterized by certain conditions, known as contingencies, that must be satisfied for the sale to proceed.

The term “under contract” often encompasses two primary statuses: “contingent” and “pending.” A property marked “contingent” means that while an offer is accepted, specific conditions still need to be met. Common contingencies include the buyer securing financing, a satisfactory home inspection, an appraisal meeting the agreed-upon price, or the buyer needing to sell their current home. If these conditions are not fulfilled, the contract can be terminated, allowing the house to potentially re-enter the market.

Conversely, a “pending” status indicates all contingencies have been met or waived, and the sale is progressing towards closing. The likelihood of the deal falling through is lower at this stage. Some listings might also appear as “active under contract,” meaning the seller has accepted an offer but is still open to receiving backup offers. This acknowledges that while a primary deal exists, situations can change, requiring an alternative plan.

The Concept of a Backup Offer

A backup offer is a legally binding proposal submitted for a property already under an accepted contract. It becomes active only if the initial, primary contract fails to close. The purpose of a backup offer is to position oneself as the next in line to purchase the home without restarting the property search. It ensures that if the current deal collapses, the backup buyer is ready to proceed.

A backup offer does not supersede the existing contract. The seller remains bound by their agreement with the primary buyer and is not obligated to break that initial contract. Accepting a backup offer provides the seller with a safety net, serving as a contingency plan that can save time and effort if they need to re-list the property.

Steps to Submit a Backup Offer

Submitting a backup offer is similar to making a primary offer, but with specific provisions for its secondary nature. The first step involves engaging a qualified real estate agent. Your agent will assist in drafting the offer, ensuring it is comprehensive and legally sound.

The backup offer is a complete purchase agreement, detailing standard terms. This includes the proposed purchase price, which can be the original listing price, a negotiated amount, or higher. It must also specify contingencies for financing, a home inspection, or an appraisal.

An earnest money deposit, typically 1% to 3% of the purchase price, is included and held in an escrow account until closing or until the offer is no longer active. The offer will also outline a proposed closing timeline, generally 30 to 60 days for mortgage-financed purchases, allowing time for assessments and loan processing.

The document must be explicitly structured as a “backup” offer. This involves incorporating language stating its contingent nature, making it clear the offer only becomes active if the primary contract is terminated. Your real estate agent will then formally submit this backup offer to the seller’s agent. This ensures the seller is aware of your interest and has a prepared agreement ready to activate if the primary deal encounters issues.

What Happens After a Backup Offer is Submitted

Once a backup offer is submitted, the seller has several options: they can accept, reject, or negotiate the terms. If the seller accepts, the backup offer becomes a legally binding backup contract. This means you are formally in line to purchase the home, but only if the initial primary contract falls through.

During this waiting period, the primary contract proceeds through its stages, including inspections, appraisals, and financing approvals. Deals can fall through for reasons such as the buyer failing to secure financing, issues from the home inspection that cannot be resolved, or the appraisal coming in lower than the agreed-upon price. While a small percentage of primary contracts terminate, it is a possibility.

Should the primary contract fail, the accepted backup offer automatically moves into the primary position. At this point, the timelines for your contingencies, such as inspection and financing periods, would typically commence as if it were a new primary contract. If, however, the primary deal successfully closes, your earnest money deposit will be returned to you, as the conditions for your backup offer becoming active were not met.