A kick-out clause is a real estate contract clause that allows you to accept offers from buyers with unforeseen circumstances in home sales while selling the home to other buyers. If a better offer appears, the seller can “kick out” the first buyer unless the contingency is removed within the specified time frame (usually within 72 hours).
Whether you’re listing homes for sale in Denver or buying one in Raleigh, this Redfin guide categorizes how the kickout clause works, who will benefit, and when it’s worth using.
What is a kickout clause?
A kick-out clause usually provides the right to continue marketing the home after accepting an accidental offer when the buyer first needs to sell the current home. If another qualified buyer submits a stronger offer, the seller can notify the original buyer.
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Why do real estate contracts include kick-out clauses?
In a competitive housing market, kick-out clauses are common.
Buyers will include contingency in home sales in the offer. Sellers want to minimize downtime in the market.
By including a kick-out clause, it protects sellers from being tied down by slower transactions and gives buyers time to sell their current home.
How the kickout clause affects buyers
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It offers the flexibility to sell your current home first. Avoiding two mortgages provides a grace period to raise funds or make solid decisions
Cons
If another buyer sells your current home quickly or offers a better offer to secure funding for the bridge, the risk of losing your home
How kickout clauses affect sellers
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Other buyers are actively listed, maintaining available properties and strengthening their negotiating position with stakeholders.
Cons
The second buyer can withdraw and further delay in sales could introduce uncertainty and additional documents to all parties
How do sellers use kickout clauses?
To exercise the clause:
We will notify the original buyer in writing that another offer has been received. It provides a response window (usually 72 hours) for buyers to act. The original buyer must remove the contingency and choose to proceed or step out of the transaction with serious money that has usually been refunded.
How to avoid this clause as a buyer
If you are a buyer and want to avoid being kicked out of your dream home:
You should first sell your current home and rent it out and consider a temporary bridge loan to cover the gap between sales and purchase.
When a kickout clause may hurt your offer
In the seller’s market, kick-out clauses can hurt your chances. In many cases, sellers receive multiple offers and are less likely to accept an accidental offer, especially if another buyer is ready to close without attaching a string.
Is the kickout clause perfect for you?
A kickout clause can protect both parties, but it is not always the best course of action. If you’re a seller, it gives you flexibility. If you are a buyer, it buys time, but comes with risk. Be sure to consult with a real estate agent or attorney to determine whether the kick-out clause is in your best interest.
Kickout clause FAQ
What does the 72-hour kickout clause mean?
After the seller receives a better offer, give the original buyer 72 hours to remove the contingency of the home sale.
Can the seller accept another offer with provisions in place?
yes. However, the first buyer must be given the opportunity to respond and proceed or withdraw.
Is this clause the standard for real estate?
Yes, especially if the buyer relies on selling his current home before he buys.
More Benefits: Who is the buyer or seller?
It depends on the market. In the seller’s market, sellers will bring more profits. In the buyer’s market, buyers can be given a breathing chamber.
