Home Buying With A 72 Hour Kick Out Contingency
The housing market is considered to be a ‘buyers market’ at present and that generally means buyers get to dictate the shots. One contingency that is often found in a home buyers offer is the contract being executed once the contract has been signed. With home sales down, that could be months away from now. Sellers have the right to include a 72-hour ‘kick out’ contingency when they accept the buyers offer.
What is a 72-hour ‘kick out’ contingency? This contingency allows the seller to keep the home on the market. If another offer is made on the home, the seller can give the first buyer 72 hours to remove their contingency and complete the sale, or the seller will execute the 72 hour contingency and accept the second offer. This can have a huge effect on the buyer, especially if they really like the new home but cannot complete the contract without the funds from the sale of their current home.
Buyers need to be wary of including a contingency that relies on the sale of the home. Sellers are not keen to keep their home unsold indefinitely so they may balk at such a contingency. Often, there is no need to include this contingency because there is a similar one already in place – the finance contingency.
The finance contingency is a more common contingency that subjects the final approval of the sales contract on the buyers ability to obtain suitable finance. Although this contingency is normally associated with the valuation of a home undertaken by an independent appraiser, it can be used for any problems associated with a mortgage – and the sale of a buyers home often does affect their ability to raise a mortgage.
Contingencies are there to protect both the seller and the buyer. While they can be useful, the unnecessary use of them can be counterproductive to a good home buying experience. If you have engaged a buyers real estate agent, be guided by their experience and views in this area. I would certainly encourage you to have your agent write the contingency since a poorly worded contingency could be voided by the seller.
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