It's normal to receive contingencies from the buyer's when entering into purchase and sale agreement. They have contingencies for things like conducting inspections and acquiring financing. On the flip side, there are a few contingencies that sellers can use to help themselves during the course of the transaction.
Seller contingencies are not as common. Sellers have a few contingencies that can be used to their advantage, should they need them. Read further to find out what they are and how you can use them to protect your interests.
The Bump Clause
The bump clause goes along with a buyers' home sale contingency. That home sale contingency states that buyers have to sell their current home before they can afford to buy yours. It allows them a specified period of time to market their home and secure a buyer while being under contract with you. If they can't find a suitable buyer within that time period, they have the option to back out of your contract. If you're considering whether to accept an offer that's contingent on the sale of the buyers' home, then you're also going to want to include a bump clause in order to protect yourself.
The bump clause effectively states that you're also allowed to continue marketing your home to others. If you receive another offer for your home before your current buyer secures a buyer for his home, then the current buyer for your home will have 5 days to come up with the funds to buy your home, either by finding a buyer of their own or applying for another mortgage. If they can't, you're then free to move forward with the other offer.
The Rent-Back Contingency
For those buying and selling a home at the same time, a rent-back contingency may be interesting. This is for situations where you end up selling your old home before you get the keys to the new one. It buys you the time necessary to move your things and settle your affairs. As the name suggests, the rent-back contingency allows you to rent your old home from the new buyer for a specified period of time. That period of time is usually until you're able to move into your new home. Keep in mind, this contingency is really asking the buyer for a favor out of courtesy. They are not required to agree to rent the home back to you.
The Find-A- Home Contingency
The use of this contingency happens rarely. It's truly not a formal contingency at this point. In this heated market, I am seeing that it is something that is being fashioned together to deal with a situation some sellers commonly face. This contingency is used in the event that the sellers find a buyer for their home before they've found anywhere to move. It allows the sellers to continue looking for a home for a specified period of time. Then, if they're unable to find a suitable new home, they have the option of ending the deal and keeping the home or moving forward with selling their home regardless. As you can see, in this case, it's only fair that you allow the buyer to look at homes or back out as well during that time frame. Some buyers may have a hard time accepting this contingency.
These are a few contingencies that sellers can use to help themselves during the course of the transaction. Seller contingencies are not as common. Sellers have a few contingencies that can be used to their advantage, should they need them.