A kick-out clause is a real estate contract provision that allows a seller to accept an offer from a buyer with a home sale contingency while still marketing the home to other buyers. If a better offer comes along, the seller can “kick out” the first buyer unless they remove their contingency within a specified timeframe, usually 72 hours.
Whether you’re listing your home for sale in Denver or buying a house in Raleigh, this Redfin guide breaks down how a kick-out clause works, who it benefits, and when it’s worth using.
What is a kick-out clause?
A kick-out clause gives home sellers the right to continue marketing their home after accepting a contingent offer, typically when the buyer needs to sell their current home first. If another qualified buyer submits a stronger offer, the seller can notify the original buyer, who must then either remove their home sale contingency and proceed with the purchase or walk away from the deal.
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Why do real estate contracts include kick-out clauses?
Kick-out clauses are common in competitive housing markets, especially when:
- Buyers include a home sale contingency in their offer
- Sellers want to minimize downtime on the market
- The home is likely to attract multiple offers
Including a kick-out clause helps protect the seller from being tied up in a slow-moving transaction, while giving the buyer time to sell their current home.
How a kick-out clause affects buyers
The pros
- Offers flexibility to sell your current home first, avoiding two mortgages
- Provides a grace period to line up financing or make a firm decision
The cons
- Risk of losing the home if another buyer makes a better offer
- Added pressure to sell your current home quickly or secure bridge financing
How a kick-out clause affects sellers
The pros
- Keeps the property actively listed and available to other buyers
- Strengthens your negotiating position with interested parties
- It can help speed up the closing process if a stronger offer comes in
The cons
- The second buyer could back out, delaying the sale even further
- May introduce uncertainty and extra paperwork for all parties
How does a seller use the kick-out clause?
To exercise the clause:
- Notify the original buyer in writing that another offer has been received.
- Provide a response window (typically 72 hours) for the buyer to act.
- The original buyer must choose to either remove their contingency and proceed or step away from the deal, typically with their earnest money refunded.
How to avoid this clause as a buyer
If you’re a buyer and want to avoid being kicked out of your dream home:
- Sell your current home first and rent temporarily
- Consider bridge loans to cover the gap between selling and buying
- Avoid including a home sale contingency in your offer if possible
When a kick-out clause may hurt your offer
In a seller’s market, kick-out clauses can hurt your chances. Sellers often receive multiple offers and are less likely to accept one with a contingency, especially if another buyer is ready to close without strings attached.
Is a kick-out clause right for you?
A kick-out clause can protect both parties, but it’s not always the best course of action. If you’re a seller, it gives flexibility. If you’re a buyer, it buys time but carries risk. Always consult a real estate agent or attorney to determine whether a kick-out clause is in your best interest.
FAQs about kick-out clauses
What does a 72-hour kick-out clause mean?
It gives the original buyer 72 hours to remove their home sale contingency after the seller receives a better offer.
Can a seller accept another offer with a clause in place?
Yes, but the first buyer must be given a chance to respond and either proceed or withdraw.
Is this clause standard in real estate?
Yes, especially when buyers are dependent on selling their current home before they can purchase.
Who benefits more: the buyer or the seller?
It depends on the market. In a seller’s market, the seller benefits more. In a buyer’s market, it can give buyers breathing room.
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