With their financing approved and their paperwork in place, Edlen's clients were able to quickly finalize the deal.
Gary Edelstone, an attorney with Surpin, Mayersohn & Edelstone, Century City, represents high-net-worth clients on tax and real estate transactions. He advises clients selling their homes to accept backup offers, but he sounds a cautionary note. "Sellers need to make sure they give all backup offers the same level of scrutiny as the original offer since they will be obligated to honor the terms of the contract if the first deal falls through."
So who does a backup offer benefit more: the buyer or the seller? Edelstone points out that sellers can use backup offers as a strategy to prevent potential buyers from making too many demands.
"When buyers know that there are people waiting in the wings to purchase a house," he said, "they may feel pressure not to request extensions or contingencies."
That happened to Tracy Moore and her partner, Lisa Edwards. After the pair made a successful offer on a 1920s duplex in the mid-Wilshire area, they learned that the seller had also accepted a strong backup offer. There were some issues with the roof and the plumbing, but with the backup offer on the table, Moore said she felt like they didn't have a lot of flexibility in their negotiations.
"We really wanted the property," she said, "so we felt we had to take it as it was."
Steve Wallis and his wife, Eileen Ehmann, renovate and restore homes in Los Angeles. After completing an extensive restoration of Dean Martin's former residence in the Hollywood Hills, they were thrilled to get a full-price offer before the house even went on the market.
The offer seemed so strong that they decided not to show the house. But during escrow, the buyer got cold feet. He eventually bailed at a terrible time -- Labor Day weekend. With no other offers in place, Wallis and Ehmann had to start from scratch, and by then, they had missed the busy summer market.
"We learned our lesson on that house," Wallis said.
The couple recently sold a house in Hancock Park on the first day it was listed but waited until they had someone lined up in the backup position before they accepted the offer.
Not all real estate agents advocate submitting written backup offers. David Raposa, owner of City Living Realty, a company that specializes in homes in the historic West Adams district, recently represented a couple who were eager to find a house in Wellington Square.
