Kick Out vs No Kick Out

Kick Out vs No Kick Out

Copyright (C) 2011, Deanna and Jim's GOLD Team

This explanation is written from the point of view of a buyer or buyer's agent.  It is posted in the hopes that listing agents are more careful with the proper use of property status values.

The MLS that serves our market area is MRIS.  The status values for a sale property include: ACTIVE, SOLD, CONTRACT, CNTG/NO, CNTG/KO, TEMPOFF, WITHDRAWN and EXPIRED.

ACTIVE and SOLD are self-explanatory. 

CONTRACT means the property is under contract with no contingencies remaining but financing. There is no point in viewing it or attempting to make an offer.

TEMPOFF is used to temporarily remove a home from active showing status while Grandma visits or you clean up the surprise accident in the basement.  TEMPOFF properties almost always transition to ACTIVE or WITHDRAWN.

WITHDRAWN is used when the seller changes their mind about selling the house. No further offers nor showings are desired.

EXPIRED occurs when the seller did not change their mind but the term of the listing contract ended. The seller may relist with the same or another agent.

CNTG/NO means Contingent with No Kick-Out.  This is to be used for properties with ratified purchase contracts containing no contingencies which the SELLER could use to void the contract if a better offer showed up from another buyer, but where there are unresolved contingencies other than financing/appraisal that could cause the contract to fall out.  The most common examples are home inspection, HOA documents, Condo documents, or approval by a third party.  CNTG/NO is not for use when the buyer's purchase is contingent on the sale or rental of another real property (that is what CNTG/KO is for).

CNTG/KO is for the specific exact use when the buyer's offer depends on the sale or lease of another real property (or something else) **AND** the buyer and seller have agreed in writing that the seller can continue to accept back-up offers, and if the seller receives a back-up offer they like better they can give the primary buyer notice to remove their contingency or void the contract and let the backup become primary.  

"Kicking Out" a contract is NOT a contract falling through.   It is specifically and exactly when a 2nd buyer can come along, make a back up offer more appealing to the seller, and persuade the seller to give the first buyer "put up or shut up" notice within the pre-agreed time frame.  A buyer who agrees to a Kick-out contingency almost always does so only because of major events that have to go their way to enable them to continue their primary offer (frequently sale or lease of other property, or sometimes timely completion of legal actions).

If the house was listed at $100,000 and it is CNTG/NO then a new buyer could offer $500,000 cash with no contingencies, and the seller would NOT be able to get rid of the 1st buyer and switch to the new offer.

If however the same house was CNTG/KO then a new buyer could make an offer superior to the current primary offer (say all cash instead of financed) and the seller might choose to give the primary buyer notice that they were about to be kicked out.

Short sales that are contingent on approval by the seller's lender(s) should not be made CNTG/KO because although the short sale might not be approved by the seller's lender(s) on the terms offered and the buyer might walk away, there is no way for a new buyer to force this to happen. 

"Kick out" is only possible when specific contract language permitting the seller to continue to take back up offers and kick-out the ratifying primary buyer with XX days/hours notice has been ratified by both primary buyer and seller. This is NOT the case with most short sales.

In casual conversation agents may say a deal "fell out," "dropped out," or "fell through."  The term "kicked out" should be used specifically only for the situation where buyer 2 kicked buyer 1 out of the deal!

(Deanna and Jim's GOLD Team has handled over 500 northern Virginia residential real estate transactions in the last 10 years. We have MBA, MSE, MA, CDPE and Associate Broker credentials.)