Any buyer who puts in an offer on a home is sure to be disappointed if they learn that the seller has decided to contract with another person. But if you truly have your heart set on a property, you might consider a backup offer.

A backup offer allows you to make an agreement with the seller so that they will consider you if the primary buyer's offer falls through. Though this step will not have any effect if the primary buyer successfully closes the deal, it can give you a second chance at a home under certain circumstances.

There are several reasons why the offer accepted by the seller might not go through to completion. Some circumstance in the primary buyer's life might force them to cancel their move, or they might not be able to secure financing. The primary buyer and seller may also part ways due to a disagreement in the buying process, such as an appraisal that determines that the home is worth significantly less than the primary buyer thought or a home inspection that identifies more problems with the property than anticipated.

A buyer and seller have to negotiate a backup offer in order for it to be an acceptable agreement. Chuck Braxton, writing for the New Hampshire brokerage Roche Realty Group, says a backup offer is similar to a typical purchase and sale agreement and includes the offered price, desired closing date, and terms related to financing and inspections. The backup offer is usually made shortly after the property goes under contract with the primary buyer.

There are usually certain contingencies in a backup offer which would not apply to a primary offer. Michael Corbett, writing for the real estate site Trulia, says the offer typically stipulates that it will expire in 30 days; this proviso might encourage a seller to reconsider your offer if they are having trouble reaching an agreement with the primary buyer within that timeframe. Backup offers also tend to give you the right of first refusal as well as the ability to withdraw your offer at any time. This clause can prove useful in case you find another home in the interim or if the building inspection or other issue sours you on the property.

Braxton says a seller does not simply hold a backup offer in reserve pending the outcome of the primary offer, but rather accepts the offer in a secondary position. As a result, you'll still have to make an earnest money deposit to be held in deposit. These funds will be refunded if the primary offer closes or if you choose to withdraw your offer.

A backup offer gives you the first opportunity to make an offer on a home if the first one considered by the seller collapses. April Dykman, writing for the mortgage resource site HSH, says this step prevents the home from immediately going back on the market and possibly involving you in a bidding war with other buyers.

You may also be in a more advantageous position than you would be if the seller had considered your offer first. Corbett says you'll save money on certain inspections because the seller will have to disclose any issues that came up during this process. However, Braxton says these reports may not be available unless the primary buyer opted to disclose them to the seller. If the seller is in the midst of moving out of their home, they may be more motivated to accept your offer.

Despite these advantages, you shouldn't expect that the seller will be more likely to accept a lackluster offer simply because the preferred offer fell through. Dykman says a backup offer should include a fair price, adequate financing, and a willingness to be flexible to a seller's needs. You can also strengthen the offer by removing certain contingencies.

While a backup offer gives you a second chance at a home, it also has certain disadvantages. The National Association of Realtors says you may be just as dismayed as the primary buyer if a home inspection uncovers serious defects. The organization says a backup offer may also reduce your competitive advantage, since a seller will know you are highly motivated to purchase the property.

Backup offers might have the effect of galvanizing the primary buyer. If this party knows that there is another offer the seller can consider, they may be more willing to make concessions and cooperate with the seller in order to close on the home.

Your own home search may be hindered by a backup offer if you decide to wait for the outcome of the primary buyer's negotiations before considering other listings. Dykman says some buyers may measure other homes against the property where a backup offer is pending, making them more likely to reject these options. Be open to other residences while your backup offer is awaiting consideration.

If you are uncomfortable making a backup offer, you can still let the seller know that you are interested in the property. The National Association of Realtors recommends having your agent inform the seller about your interest and keep an eye on the transaction. If the primary buyer's offer falls through, you can submit your offer for consideration right away.