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A Kick Out What, When Your Dream House just can't Wait

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Education & Training with Glasswork Media Arts

A Kick Out What, When Your Dream House just can't Wait

I am currently in a real estate deal here in Gettysburg and it involves a number of dominoes to fall correctly for the deal to go through. I mentioned to my client that we might be able to utilize a kick out clause. The reaction I got clearly told me that they had never heard of such a thing. So being the relieable Gettysburg Realtor that  I strive to be here is an explaination of the "kick out" clause.

The formal definition:


           
A term that refers to a real estate contract contingency that's often used when a home buyer places a house under contract with the understanding that he must sell his current house before finalizing the new purchase.

A simpler explaination:

            Your Realtor has found the house of your dreams, the moment you and your spouse walked into the place you both knew "this was the one". You need to sell your house first to purchase your dream home. Your house is on the market, in fact it just went under contract, it is set to close in 45 days. What do you do, do you sit and wait and hope that your dream home will still be on the market by the time everything closes on your house, do you take a chance and put in an offer on the dream house?

Here is where a kick out clause could come in handy. You put in an offer on the dream house with a contingency that your house closes before you are expected to perform on the dream house contract. The seller of the dream house says, no way, I am not taking my house off the market on the chance that yours will close. So added to the contingency you add a "kick out" clause that places a specific amount of time for you to perform should the seller recieve another offer. The dream house stays on the market while the clause is in effect, that way the seller can continue to market the home for sale. If the first buyer with the kick out cannot perform in the specified amount of time, the seller can back out of that contract and move forward with the new contract. Basically, it temporarily puts the first buyer waiting to close on his own deal in first position, with the stipulation that he understands that should a second offer come in, he/she has to perform or be "kicked out" of first position.

Should you or a friend or family member have any additional Real Estate questions feel free to contact GettysburgGerry for the answers.
           
                   

Comments (4)

Anonymous
Charlie Dresen

Today, "kick-out" clauses should be a term we all know and use. Or at least have it in our tool box to bring out. Just make sure it makes sense to all parties and how it's written will protect your client. And make sure it's not written too cutthroat. Let's all get a long here and try to get a deal done.

Jan 27, 2011 02:59 AM
#1
Charlie Dresen
The Group, Inc - Steamboat Springs, CO
Steamboat Springs, CO e-Pro

27 2011

 

Today, "kick-out" clauses should be a term we all know and use. Or at least have it in our tool box to bring out. Just make sure it makes sense to all parties and how it's written will protect your client. And make sure it's not written too cutthroat. Let's all get a long here and try to get a deal done.

 And one more thing, try to limit it to just "having to sell something first". Don't make remove other contingencies and rights.  

 

Charlie

Jan 27, 2011 03:02 AM
Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

In our area the status of the listing changes to C/KO and does not stay Active.  The problem of course is that not to many agents search for homes with the status of C/KO AND to many agents misuse the KO to mean, home inspection contingency or short sale addendum or things that it is not intended for.  So instead of looking through a few homes we have to look through hundreds sometimes to find the ones with a true KO.

Jan 27, 2011 03:21 AM
Susan Mangigian
RE/MAX Preferred - West Chester, PA
Chester & Delaware County Homes, Delaware and Ches

We have two forms for this Gerry.  One is the Sale of House contingency clause which is used when a house is listed, or about to be listed, but not under contract.  There are two types.  One gives the seller the right to continue to market and if he gets another offer can cancel the first offer.  This is not so great for the buyer who is spending money to do inspections up front.  The other form has the buyer take the house off the market for a specific amount of time and if the buyer's house doesn't sell by the date in the contingency, he can put his house back on.  This, obviously is not great for the seller.  We used to have a form that allowed for a 24 to 72 hours kick out clause.  The seller continued to market the home and if another offer came in, he gave the buyer right of first refusal.  If they could not demonstrate that they could move forward, the first agreement became null and void.  This is the best of all possible scenarios and even though our local board doesn't have this form, we still use a variation of the old one.  

When a house is sold but not settled, we have a Settlement of house contingency, which has no kick-out clause.

 

 

Jan 27, 2011 08:04 AM