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Home Seller Tips: Most Common Contingency Clauses


Let’s pretend you’ve decided to sell your Nashville house. So, you place it on the market and guess what? It gets multiple offers within 48 hours! Hooray – time to set the closing date, sign the papers and hand over the keys. Well, not quite. Most offers will include contingency clauses that allow either the buy or seller to back out under certain circumstances. Here are the ones most likely to appear.

Standard contingency clauses

These are the clauses most home seller will encounter with an offer. In some cases, if the buyer is paying cash these will be waived.

  • Home inspection – This clause gives the buyer the right to walk away (with earnest money) if the home inspection reveals major damage that was not previously disclosed.
  • Appraisal contingency – If the home appraises far below the purchase price, the buyer can terminate the contract (with earnest money). Sometimes the buyer will want to continue with the process – particularly with homes in highly sought neighborhoods.
  • Financing contingency – This contingency allows the buyer time to find and secure financing. A set number of days is usually given, and the contract is void if the buyer can’t find financing in that time.

Additional contingency clauses

While not always included in every offer, these are additional clauses that are frequently used.

  • House sale – It’s generally better to have sold a home first. But sometimes a house becomes available and buyers jump at the chance to grab it. The clause allows buyers to back out if they aren’t able to sell their existing home in enough time.
  • Kick out  –  This contingency is for the home sellers. It allows a seller to accept an offer with contingencies but continue to accept other offers for a specified time period. If another qualified buyer makes an offer, the first buyer has a period of time (usually 72 hours) to remove the contingency and keep the home. Otherwise the seller may then move forward the better offer.

Since real estate offers are contracts between buyers and sellers either party can add any contingencies they want. However, these are the most common contingencies we deal with on a regular basis.

Have more questions about contingency clauses or Nashville real estate in general? Call DeSelms Real Estate today at 615.550.5565 and see how we can help you!


One Response to “Home Seller Tips: Most Common Contingency Clauses”

  • Great tip about checking the kick-out clause first. I need to get an agent to find a house for me in Tampa. We have to move there for my new job.

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