Your friend, the backup offer

Make the chaos of negotiation work for you!

  • 4 min read
  • July 9, 2020

Coronavirus has not slowed down Tacoma’s housing market at all. While general business practices may have changed, such as mandatory masks and appointment-only showings, overall the marketplace is very similar to where we were about a year ago.

In just the last three months – the “COVID market” – home sale prices have still risen by 2.5% on average in Tacoma. Time on market for listings in our area averages around 5 days. And the average Tacoma home sells for 1.5% higher than the original listing price, meaning multiple offer bidding wars are still very common.

Fast-paced market conditions, however, do not mean that sellers should get overconfident…or that buyers should lose heart. Properties only go under contract if they are priced accurately and marketed appropriately. Getting under contract only takes you to first base: getting to home plate requires 30 days or so to pass an inspection, make it through the appraisal, and navigate the escrow process.

It’s no wonder then, that many transactions that are under contract end up failing and going back on the market. This can happen for many reasons. Some of the most common ones include:

  • The buyer’s financing fails. Even more common these days with heightened COVID-19 Fannie Mae underwriting rules.
  • The inspection may reveal a serious defect with the property, or the buyer and seller can’t agree on repair items.
  • The buyer sees something about the home owners’ association they don’t like (not uncommon with condos).
  • The appraisal may come in low, and the buyer and seller can’t come to an agreement on price.
  • Buyers sometimes just get cold feet and change their minds.

Wouldn’t it be great if you could use that uncertainty to your advantage? You can, with the Form 38A!

Commonly referred to as a Back-Up Agreement, this form allows a seller to immediately go under contract with another buyer if the offer they are currently under contract with fails for any reason. This can benefit both sellers and buyers in different ways.


  • You avoid the headache of going back on the market, and your house doesn’t get a stigma. “Why did your listing go back on the market?” is a common question listing agents would rather avoid.
  • Back-up offers are a potent negotiating tool for dealing with your current buyer. Buyers have negotiating clout during inspections because of the implicit threat of walking away from the deal. If you have another buyer waiting in the wings, this threat is lessened and your current buyer may behave more mildly during the inspection contingency.
  • You are not limited to just one back-up! It is entirely possible to have multiple back-ups lined up, in ranked order.


  • Going under contract from back-up status means you’re not competing with other buyers on the open market. If the first offer fails and you’re the only offer left, you and the seller can negotiate on more even ground.
  • In most cases, going under contract from back-up status doesn’t trigger escalation clauses (i.e. bidding the price up). Unless the seller specifically negotiated your back-up offer to a particular price, you may save some money by avoiding a bidding war if the seller reverts to your back-up offer.

Negotiation is chaos. When the time comes to wade into these waters, make sure you’re setting sail with an experienced navigator who knows the market and can help you come out ahead! Message me anytime if you’re curious about how your house might be marketed for top dollar, or for any general inquiry about the market.

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