A sale contingency (also called a home sale contingency) means the buyer must sell their current home before closing on yours. This is risky for sellers because your closing depends on someone else's sale going through. The better option is often a defined timeline with a kick-out clause.
Understanding the types of contingencies and their risks helps you evaluate which offers to accept.
Types of Contingencies
The most common contingencies in a real estate contract include the inspection contingency, financing contingency, appraisal contingency, and home sale contingency. Each one gives the buyer the right to walk away under specific conditions. The inspection and financing contingencies are standard and expected in most transactions. The home sale contingency is the most risky for sellers.
Why Home Sale Contingencies Are Risky
When a buyer has a home sale contingency, your closing date depends on when they sell their home. If their home does not sell, you cannot close. This can delay your closing by months or cause the deal to fall through entirely. Meanwhile, your home stays off the market while the buyer tries to sell.
Better Alternatives
A kick-out clause (also called a release clause) lets you continue marketing your home while the buyer tries to sell theirs. If you receive another acceptable offer, the first buyer has a limited time (typically 48-72 hours) to remove their home sale contingency or the deal terminates. This protects you from waiting indefinitely. Some buyers may also qualify for a bridge loan to buy without selling first.
As a dual-licensed loan officer and realtor, I can help you evaluate the financial strength of any offer and structure contingencies that protect your interests while making the deal work.
