When a seller accepts another offer is accepted, this does not necessarily mean the game is over for you. The seller may have deemed someone else’s offer is superior. For instance, he or she might have accepted a higher price or the promise of a cash deal and a quick closing date.
Wait until the ink is dry
In New York, the home buying process is different than certain other states, where the seller’s acceptance of a formal offer creates a contract. In this case, neither the seller nor buyer is prevented from walking away without penalty once the offer is accepted. At this point, it moves on to the next phase, where both attorneys conduct due diligence and review the contract, including the contingency clauses. It is binding only to both parties once it passes the due diligence stage, and is signed by both the buyer and seller, and is considered “in a contract.”
This means, if either party backs out prior to an inked contract, you are next in line.
Why parties back out
You should have your buyer’s agent try to find out why the deal fell through. The buyer or seller might have had a good reason that would not give you pause to go ahead. Typically, buyer’s agents do a good job screening their clients. However, perhaps the buyer did not provide his or her financials promptly and there, was a concern that he or she could not pass muster with the board. Other reasons might include a buyer’s failure to get financing, or he/she got overwhelmed by the process. The latter might occur if it is a first time home buyer, and/or a friend/relative advised that the deal does not make financial sense.
You should know if there was something else going on, though. For instance, if the seller was making unreasonable demands, you will inherit the same issue.
You are not obligated
Just because you are the backup offer does not mean you have to sit on your hands hoping the accepted offer falls through. You are not legally bound by it, meaning you are free to look at other properties. If the initial offer falls through, you are not obligated to step up and purchase the unit. Should you find another property you like at least as much; you can walk away from the other place.
You are free to change your mind for any reason. Perhaps you have had a change of heart, your financial circumstances have changed, or you may have found a different co-op or condo. You may have no reason at all. In any case, there is no financial penalty for you should you decide not to go through with the purchase.
No harm, no foul
While it may seem you are a seller’s second choice, there is no harm in putting in a backup offer. Someone could jump ahead of you, meaning you may not stand second in line. Although this seems to favor the seller; you retain your right to rescind your offer and walk away at any time.