How a Home Sale Contingency Works in Northern Virginia
If you want to buy a home but need to sell your home first, you will need a home sale contingency, also known as a sale of home contingency.
Here is exactly how a home sale contingency works.
As a buyer, your primary goal is to present your contingency as a low-risk proposition for the seller. Sellers will want to know how much your home will be listed at - ideally lower than higher, when it will be on the market - ideally, as soon as possible, and how long you think it will take to sell. They want the freedom to kick out your contract should they receive a backup offer.
Once you are under contract and come to terms with the contingency, the seller still has the right to show the home, market the house, and accept backup offers.
If the seller receives an offer before you can release your contingency, they can kick you out of the contract but only after giving you the right of first refusal.
What is a Kick-Out?
A kick-out clause, similar to a right of first refusal, allows the seller to reject a previously accepted offer in favor of another.
If a seller receives a more lucrative backup offer, they are required to notify the original buyer.
Kick-out clauses are used as a compromise in a home sale contingency; it allows the seller to kick out the offer if a better one becomes available.
Once the original buyer receives notice of the new offer, they must decide if they want to move forward with the purchase but without their home sale contingency.
If the original buyer chooses to walk away from the deal, they will collect their earnest money, and the seller is free to accept the new offer.
Realities of Home Sales Contingencies
The reality is there is risk in home sale contingencies
As a buyer, you can’t mitigate the risk.
Yes, you may face hurdles - you look at the house, fall in love with it, make an offer, and get your home on the market - but ultimately, there is no guarantee of success.
As a seller, if you accept a contingent offer, you must change the status of your home in the MLS to no longer appear as active. Interest and showings will decline significantly.
Home contingencies are a delicate dance with several moving parts. However, when executed correctly, everyone wins.
If you have questions about contingencies or real estate, please reach out.