In a Sellers market, it is not uncommon for there to be multiple offers on a property. While this may seem like a great problem for sellers to face, how do they know that the buyer they choose can close on the home? Regardless of what market you’re in, sellers want to make sure they choose the right offer. This is where a kick-out clause can help.
A kick-out clause allows a seller to continue to market the home for sale after accepting a buyer’s offer with contingencies. It also outlines the conditions under which a seller can cancel, or kick-out, the contract if they get a better offer.
Most real estate contracts include contingencies. Most common include loan approval, appraisal, and home inspection. Often buyers will also include a contingency to sell their current home. A kick-out clause protects the seller from an escrow that drags on past the agreed-upon time frames. For example, if a buyer is unable to sell their home or home inspection negotiations continue past the time frames agreed to in the contract, a seller can use the kick-out clause to force the buyer to remove the contingency or cancel the contract.
Once escrow is opened, typically both parties must agree to close the process. This can cause delays that cost the seller both time and money. A kick-out clause is one way to ensure the escrow closes on time, and that there are back-up offers ready to go if it doesn’t.
Buying a home is a process. Once a buyer writes an offer and has it accepted, the listing is placed in a state called “pending sale.” During this stage, the principals involved perform all the elements of the contract, and once complete, the title is transferred to the new owner.
Typical real estate offers include a wide variety of standard contingencies. These can include home inspections, appraisal, and loan approval. In a fast-moving, seller’s market, one of the ways to make an offer more appealing is to remove contingencies.
It may seem like there are a million steps to the closing process when buying or selling a home. A title search is just one of the many stages and title problems may account for almost 10% of closing delays. As a seller, doing a preliminary title search can help avoid costly delays at the end. So, what is a title search and what does it disclose?
“When can I consider my home sold? This is one of the most common questions real estate agents are asked. While the laws vary in different states, generally the contract is binding once both parties sign the offer. At that time the closing process begins. This is also the time when sellers must stop considering other offers, but they can accept back-up offers.