By Ali Larsen
Want to buy something but don't want to risk your home not selling? Here is a solution that works in some markets!
Introduction
A “sale of buyer’s home” clause is a common condition in real estate transactions. It allows the buyer to make an offer on a new property with the condition that they must sell their current home first. Here’s how it generally works:
Contingency Clause
When a buyer makes an offer on a new home, they include a contingency stating that the offer is only valid if they can sell their current property within a specified time (often 30-60 days). This protects the buyer from being financially committed to two homes if their current property doesn’t sell.
Kick-Out Clause
Most sale-of-buyer’s-home contingencies come with a “kick-out” clause. This allows the seller to continue marketing their home to other potential buyers. If a new offer comes in, the original buyer usually has a limited period (e.g., 24-72 hours) to either remove their contingency and proceed with the purchase (typically needing proof of financing) or allow the seller to accept the new offer.
Conditions for Proceeding
If the buyer sells their home within the contingency period, the transaction moves forward as usual. If they can’t sell within that time, the buyer and seller may either extend the contingency or the contract could be terminated, allowing the seller to relist. This clause is often used in slower markets or with buyers needing to sell their current home to fund the next purchase. It’s a useful tool but can make offers less competitive, especially in hot markets.