Finding your dream home in a competitive real estate market can be challenging. Often, properties are snatched up quickly, leaving little room for those who miss out. However, there is a strategy that can increase your chances of acquiring your desired property even if someone else has a contract on it: making a back up offer. In this post, we will explore the concept of back up offers and highlight a few important considerations to keep in mind when pursuing this opportunity.
1. Protecting Your Interests with a Conditional Offer:
When making a back up offer, it is crucial to protect your interests until the previous contract is cancelled. Ensure that your offer explicitly states that your conditions will not take effect until the previous agreement has been terminated. This step will help you avoid unnecessary expenses, such as obtaining a LIM (Land Information Memorandum) or a builder's report, until you are certain that your offer is in play.
2. The Role of Roll Over Clauses:
When negotiating a back up offer, it is essential to inquire whether the previous agreement contains a roll over clause. A roll over clause requires the property owner to provide notice to their current purchaser requiring them to confirm their agreement within a specified timeframe; otherwise, the agreement is automatically cancelled. If such a clause exists, it can significantly speed up the process for you as a potential buyer, reducing the waiting time and increasing the likelihood of your contract taking effect.
3. Determining the Confirmation Period:
In cases where no roll over clause is present, it is important to determine when the previous agreement is due for confirmation. By asking the real estate agent about this timeline, you can gauge how long you will need to wait. Understanding the confirmation period allows you to plan accordingly, ensuring you do not miss out on other potential properties while waiting for the outcome.
Back up offers present an excellent opportunity for homebuyers to secure their dream home, even when another buyer has a contract in place. By including a clause that starts your timeframe when the previous contract is cancelled, asking about roll over clauses, and understanding the confirmation period, you can navigate the process more effectively.
If in doubt feel free to always reach out to the team at Absolut Legal so we can help. Absolut Legal are Property Lawyers who can navigate you through the conveyancing process and help you buy a home.
