How to create a home sale contingency for a real estate contract
It’s important to go over how this contract is written in an agreement of sale. While you won’t need to worry about the exact wording as a buyer, it’s important to understand what this clause consists of. So that you can ensure each element of it works to your benefit. To that end, this clause typically has a few separate parts:
The length of time the buyer has to market their current home
With a hubbard clause, the buyer is given a set amount of time to market their current home for sale. If they are able to find a buyer for their home within that time, the contract moves forward. However, if they are not able to find a buyer during that time, they are left with three options. They must either ask for an extension, choose to move forward without selling first, or back out of the contract entirely.
This timeframe is put into the agreement so that the contract does not linger on indefinitely. As the buyer, it’s important to think carefully about the timeframe you request. It needs to be long enough that you will be able to find a potential buyer for your home, while still being short enough for the sellers to accept.
The buyer’s right of first refusal
A key component of the home sale contingency is that the sellers are typically still allowed to continue marketing their home while they are waiting for the buyer to be able to move forward. If they should receive another offer during that time, the original buyer is given the right of first refusal.
A right of first refusal means that once the seller makes it clear that they have another offer in hand, the buyer will then be given the option to decide to move forward with the contract without selling their home first or to exit the contract entirely.