When it comes to selling a home, contingencies are a fact of life.  In plain English, this means that an offer to buy your home will probably come with “conditions.”  Not only will the buyer and their lender require a favorable inspection of your property, but they’ll want to see that your home’s sale price is reasonably close to its appraised value.  If the appraisal or inspection falls short of expectations, the offer may be rescinded.

Another condition is one that more and more sellers are encountering.  If your buyer still owns their current home, their offer to purchase your property may very well be contingent upon their own home sale.  This presents a common but very real dilemma for sellers.

BY accepting such a contingency, your home will be off the market until your buyer’s home sale closes.  But what if their house needs unexpected repairs before it’s marketable?  What happens if they also receive a sale-contingency offer?  What if they still can’t qualify for sufficient financing after their home sells?

Real estate pros have created a sensible solution to this problem – called a “kick-out clause.”  In essence, this is a contingency layered on top of a contingency, which states that the seller agrees to the buyer’s sale-contingency provision, but will continue to market their property.  If another qualified offer is received, the first buyer will be given 3-5 days to either remove the contingency and purchase the house with no conditions, or void their offer.  To further protect the seller, many such clauses also stipulate that the buyer must provide proof of financing before the kick-out period expires. 

True, the kick-out clause is a compromise for both parties, but like most aspects of home buying and selling, compromise is the name of the game.