The declining number of homes for sale in Tallahassee is causing an old question to resurface in Tallahassee, as buyers want to know my thoughts on whether to write a back up contract on a home.
The question is being asked more and more due to the fact that our Tallahassee MLS IDX Feed (the data stream sent from our MLS to populate all real estate websites that feature homes for sale from the Tallahassee MLS) includes everything on the market, including homes already under contract.
So when you are on Zillow, or Trulia, or even our very popular Tallahassee Property Search Tool, those “homes for sale” include homes that already have contracted buyers.
So, between the facts that there are fewer homes to see (though still plenty) and the fact that you cannot at first blush know whether the home is already tied up, how do you feel about writing a back up contract on a home?
Why Write A Back Up Contract On A Home
Historically, I have advised home buyers that looking at homes already “taken” is a bad mistake. If you find a home that you really love, but cannot have, it skews your opinions on all the remaining inventory of homes.
I still feel the same way about looking at homes under contract, and I really do not like the thought of having one of our customers write a back up contract on a home. But there is compelling evidence that this stance should be re-evaluated.
Consider A Back Up Contract On A Home
In the real estate graph above, we compare closed home sales in a current month with homes under contract from a previous month. The resulting red line shows the monthly ratio or percentage of homes under contract that actually close.
The yellow line measures the one-year average of this percentage. Currently, 37% of homes under contract are making it to closing.
With 2 out of every 3 contracts in the Tallahassee MLS failing to close, it makes sense for buyers to consider writing a back up contract on a home.
I still think it is a “plan B” approach, and that buyers should first look at homes that do not yet have a committed buyer, but the odds say that writing a back up contract on a home has a better than even chance of getting you the home.
As you conduct your search online to buy a home in Tallahassee, just know that many of these homes are already under contract.
If you want to know which homes already have contracted buyers, just drop me a note and we’ll help you sort it out. And if you choose to write a back up contract on a home, we can help you get all the information before you decide to act.