Home Sale Contingency Clauses: When to Walk Away
Welcome to the world of real estate where the buying and selling of properties can sometimes become a complex and daunting task. As a home seller, you are probably looking to get the best deal for your property in the shortest amount of time. However, the process of selling a home is not always smooth sailing. In some cases, buyers may include certain clauses in the sale contract that can delay or even jeopardize the sale. One such clause is the home sale contingency clause. In this article, we will discuss everything you need to know about home sale contingency clauses and when it may be necessary to walk away from a sale due to these clauses.
Understanding Home Sale Contingency Clauses
Before we dive into when to walk away from a sale due to home sale contingency clauses, let’s first understand what these clauses are and their purpose. Home sale contingency clauses are conditions that are inserted into a real estate sales contract, usually by the buyer. These clauses state that the buyer’s purchase of the property is dependent on certain conditions being met. This essentially means that if the conditions outlined in the clause are not met, the buyer has the option to walk away from the sale without any repercussions. These clauses are becoming increasingly common in the real estate market, especially in a competitive seller’s market where buyers may need more time to sell their existing property before purchasing a new one.
Common Home Sale Contingency Clauses
There are several types of home sale contingency clauses that buyers may include in a sale contract. The most common ones are the sale and settlement contingencies. A sale contingency means that the buyer needs to sell their current property before purchasing the new one. This condition is usually included to protect the buyer in case they are unable to sell their property within a certain timeframe. A settlement contingency, on the other hand, states that the buyer needs to receive the proceeds from the sale of their current property before closing on the new one. This prevents them from being financially liable for two properties at the same time.
When to Walk Away From a Sale Due to Home Sale Contingency Clauses
While home sale contingency clauses are designed to protect buyers, they can also cause delays and complications in the sale process for sellers. As a home seller, there are certain scenarios where it may be necessary to walk away from a sale due to these clauses. The first and most obvious scenario is when the buyer’s contingency period has expired, and they have not sold their property or obtained financing. In this case, if the buyer is unable to meet the conditions outlined in the contingency clause, it may be time to move on and find another buyer.
Another scenario where it may be necessary to walk away from a sale is when there are multiple contingency clauses in the contract. If the buyer has included several contingencies, such as the sale of their current property, obtaining financing, and a home inspection, it can significantly increase the risk of the sale falling through. This can not only delay the sale, but it can also become a major cause of stress for the seller. In this situation, it may be wise to consider other offers from buyers who do not have as many contingencies.
Protecting Yourself as a Seller
As a seller, it is important to protect yourself against potential delays or failed sales due to home sale contingency clauses. One way to do this is by setting a reasonable and realistic timeframe for the buyer’s contingency period. This will ensure that if the buyer is unable to meet the conditions within the specified timeframe, you have the option to terminate the contract and move on.
Additionally, it is important to carefully review and negotiate any contingency clauses before signing the sale contract. You can also consult with your real estate agent or attorney to discuss any potential risks and come up with a suitable solution.
In Conclusion
Home sale contingency clauses can be a useful tool for buyers, but they can also cause delays and complications in the sale process for sellers. As a home seller, it is important to carefully consider the risks involved and protect yourself against potential issues. If you find yourself in a situation where the buyer’s contingency clauses are causing significant delays or complications, it may be necessary to walk away from the sale and explore other options. Remember, it is important to always consult with professionals and carefully review all aspects of a sale before making any decisions.
