What is a First right of refusal? You may have heard this term many times in real estate dealings, but let's explain exactly what that is and what it means to you.
Typically, a First right of refusal is something that is included with an offer to purchase a home when there is a contingency.
Here is the most typical situation:
You want to purchase a home, but you have your own home that you still have to sell. You then would ask the seller to accept your offer "contingent" upon the sale of your own home. The issue for both parties though, is that no one knows how long it will take for you to sell your home. So the seller can continue to market the home in hopes of finding a buyer without such contingency.
Let's say that seller does find that ready & able buyer with no contingencies. They will then notify you that another offer has been presented - but since you were the first to go under contract for that home, you have the opportunity to either back out or remove your contingency (normally within 48 hours). This is the First right of refusal, and is also why it's often times called a 48-hour First right of refusal. It gives you the ability to find a buyer for your home within that 48-hour period (or remove any other contingency you have specified). If you are unable to do so, you would have to release the offer (and you would receive your earnest money deposit back as well).
If you do get an offer on your current home BEFORE the seller gets another buyer's offer to purchase their home, you would simply remove your contingency (and of course the 48-hour First right of refusal) because then the home is yours.
The First right of refusal is a very common practice in real estate transactions, because it gives both the buyer and seller an up front time table as to what will happen if another offer comes in on the home. I hope you have found this explanation to be beneficial to you.
Information is provided by Randy DeMille with Atlantic Bay Mortgage.
Randy can be reached direct at the office at (757) 222-9839 or e-mail randydemille@atlanticbay.com.
Website is www.AtlanticBay.com/RandyDeMille.
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Post prepared by Randall F. "Randy" DeMille, NMLS# 112145. Atlantic Bay Mortgage Group is an Equal Housing Lender and is licensed by the Virginia State Corporation Commission, License #MC-936 & NMLS#72043. Licensed in Virginia, North Carolina, South Carolina and Florida.
What is a First right of refusal? October, 2010.
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