Backup Offers: What to Put in the Back-Up Addendum
Backup Offers: What to Put in the Back-Up Addendum
The Back-Up Addendum (TXR 1909) positions your buyer as next in line if the primary contract falls through. Here's what to put in it and how agents typically approach it.
The Key Figures
1. Termination Option Fee (Paragraph 1)
Most agents write in a nominal amount — typically $10 to $100 — for the backup option fee. This keeps the backup position without your buyer paying a significant non-refundable fee on a deal that may never come to them.
Common practice: $10–$25 for the backup option period fee.
2. Termination Option Period (Paragraph 1)
The backup buyer typically gets a short option period once the primary contract terminates and the backup activates. Common range: 5–10 days.
This gives your buyer time to do due diligence once they know the property is actually theirs.
3. Earnest Money (Paragraph 2)
Earnest money in a backup offer is generally not delivered until the backup activates — i.e., when the primary contract falls through. Specify in the addendum that earnest money delivery is triggered by activation, not by the signing of the backup contract.
Typical earnest money amounts mirror what you'd offer in a primary contract for that price point.
4. Effective Date of Backup (Paragraph 3)
The backup contract's effective date starts when the seller notifies the backup buyer that the primary contract has terminated. Make sure your buyer understands there's no guarantee of timing — the primary buyer could terminate day 1 or day 45.
Practical Tips
- Keep your buyer informed. Being under contract as a backup can feel ambiguous. Set expectations: they should keep looking until the backup activates.
- Backup position doesn't prevent your buyer from buying another property. The backup contract typically allows the buyer to terminate if they go under contract elsewhere — confirm this with your buyer.
- Confirm with the listing agent what the status of the primary contract is. Knowing how far along the primary buyer is helps you advise your buyer on whether the backup is worth holding.