Although less than ideal, sellers are seeing more “contingency” contracts, wherein the buyers make their offer contingent upon being able to sell their own home first to complete the purchase. If the buyers aren’t successful, their Offer To Purchase becomes null and void, potentially leaving the sellers back at Square One.
A comprise has developed, called a “kick-out clause,” which is wording included in the contract that allows the sellers to continue marketing their home to non-contingent buyers even while under contract with the contingent buyer. If the sellers accept another offer, the buyers are notified and given a period of usually 24 hours to remove their sell-first contingency or release their contract and step aside.
Unfortunately, the chances are that most buyers who have contingent contracts probably won’t qualify for another loan on the new property without selling their current home. If the buyers can’t qualify for both loans, they’ll need to step aside and start their home buying search over again.
While this might seem to put the contingent buyers at a disadvantage, the sellers must have some sort of protection against an offer that could tie up their home indefinitely and perhaps keep it from ever being sold.
Consider making sure the contingent buyers have their home price aggressively. If their home is not currently on the market, make sure one of the terms of you contract is that they will have their home listed with an experienced local agent within 48 to 72 hours after acceptance of the contract. You don’t want to risk your future by having your contingent buyer try to sell their home without the guidance of representation.