What Is a Backup Offer and Should I Submit One in San Diego?

What Is a Backup Offer?

A backup offer is a purchase offer submitted on a property that is already in escrow with another buyer — in backup position. If the primary transaction falls through for any reason — inspection dispute, financing failure, or buyer cancellation — the backup offer automatically becomes the primary offer and escrow opens with the backup buyer without the property going back on the market.

Why Backup Offers Work in San Diego

San Diego escrow cancellation rates are meaningful — industry estimates suggest that 5 to 15 percent of transactions that open escrow fail to close. A backup offer positions you to benefit from these cancellations — giving you a second chance at a property you lost without having to compete all over again in a new multiple-offer situation.

How Backup Position Works

• Your offer is accepted in backup position — you are in contract but the primary buyer has priority
• You are not in active escrow — your earnest money is not yet deposited until you move to primary position
• If the primary buyer cancels, you automatically move to primary and escrow opens with your terms
• You are free to purchase another property while in backup — but must notify the seller if you do
• The seller may continue to show the property and accept other backup offers behind yours

When Submitting a Backup Offer Makes Sense

• You genuinely want this specific property and believe the primary deal may not close
• The property has been on the market a long time or had previous failed escrows — suggesting instability
• The primary buyer waived contingencies and faces appraisal or financing risk
• You are patient and not in a rush to close on something immediately

Risks and Considerations

Being in backup position can delay your search if you are waiting for a deal that may never fall through. If you find another property you prefer while in backup, you must cancel your backup offer — giving up your position. Rieder Homes Group evaluates backup offer situations for every buyer client to determine whether the opportunity is worth the strategic trade-offs.

Related Reading on RiederHomes.com:

→ Blog #86: Making an Offer

→ Blog #88: Multiple Offer Strategy

→ Blog #95: Can I Back Out?

→ Blog #89: Contingencies Explained

— Mance Rieder, Broker Associate | Rieder Homes Group | REAL Broker | riederhomes.com | 858-295-0556