Real estate transactions often involve complex negotiations and safeguards to protect buyers and sellers. One of these safeguards is the Buyer’s Home Sale Contingency. This clause in a purchase agreement makes the purchase of a new property dependent on the successful sale of the buyer’s existing home. While this contingency offers buyers financial protection and prevents them from owning two properties at once, it can also make their offer less attractive to sellers, especially in competitive markets.

In this guide, we’ll break down what a buyer’s home sale contingency is, how it functions, its advantages and drawbacks, and how it influences negotiations in 2025.

An Overview of Buyer’s Home Sale Contingency

What is a Buyer’s Home Sale Contingency?

A Buyer’s Home Sale Contingency is a contractual clause that states the buyer’s obligation to purchase a property is contingent upon selling their current home within a specified timeframe. If the buyer cannot sell their home, the contingency allows them to walk away from the deal without penalties, protecting them from being burdened with two mortgages simultaneously.

How It Works

1. Offer Submission: The buyer submits an offer on a property that includes a home sale contingency.

2. Seller’s Response: The seller may accept, reject, or counteroffer with conditions (such as a kick-out clause).

3. Timeline Established: Both parties agree on a period during which the buyer must sell their current property.

4. Sale of Current Home: The buyer actively markets and attempts to sell their home.

5. Contingency Resolution: If the home sells, the buyer proceeds with purchasing the new property. If not, the buyer may withdraw without losing their earnest money deposit.

Advantages of a Buyer’s Home Sale Contingency

• Financial Protection: Buyers avoid the risk of paying two mortgages simultaneously.

• Flexibility: Provides time for the buyer to sell their home before committing to a new one.

• Reduced Stress: Buyers can focus on one major transaction at a time.

• Negotiation Leverage in Balanced Markets: In slower or balanced markets, sellers may be more willing to accept these contingencies to secure a serious buyer.

Disadvantages of a Buyer’s Home Sale Contingency

• Less Attractive Offer: In hot seller’s markets, sellers often prefer non-contingent offers.

• Possible Delays: Waiting for the buyer to sell their home can extend the transaction timeline.

• Risk of Losing the Property: Sellers may accept a backup offer if the contingency drags on.

• Weaker Negotiating Position: Buyers with contingencies may have less leverage when negotiating price or terms.

Buyer’s Perspective

For buyers, this contingency is a safeguard against overextending financially. It is especially useful for families who need the equity from their current home to fund the purchase of a new property. However, buyers must weigh the protection against the possibility of losing out on a desired property in a competitive bidding environment.

Seller’s Perspective

Sellers may view a home sale contingency as a risk. Accepting such an offer means tying up their property while waiting for the buyer to sell theirs. To balance this, sellers often negotiate protections such as:

• Kick-Out Clause: Allows the seller to continue marketing the property and accept other offers while the contingency is in place. If a new buyer submits a stronger offer, the original buyer must remove the contingency or step aside.

• Shortened Timelines: Sellers may require stricter deadlines to minimize delays.

Alternatives to a Home Sale Contingency

• Bridge Loans: Buyers finance the new purchase while waiting to sell their existing home.

• HELOCs (Home Equity Lines of Credit): Buyers use home equity to fund a down payment without immediately selling.

• Rent-Back Agreements: Buyers sell their home and rent it back temporarily to gain time before moving into the new property.

• Selling Before Buying: Eliminating the contingency entirely by selling first.

Case Studies

• Case 1: Smooth Transaction
  A buyer includes a home sale contingency in a balanced market. Their existing property sells quickly, and the purchase of the new home closes smoothly within the agreed timeline.

• Case 2: Competitive Market Risk
  A buyer includes a home sale contingency in a hot market. The seller accepts another non-contingent offer, leaving the first buyer without the property they wanted.

• Case 3: Seller Uses Kick-Out Clause
  A seller accepts a contingency but continues showing the property. When another offer comes in, the first buyer removes the contingency and secures financing, saving the deal.

Frequently Asked Questions

What is a buyer’s home sale contingency?
It’s a clause that makes the purchase of a property dependent on the buyer selling their current home.

Why do buyers use this contingency?
To protect themselves financially and avoid paying two mortgages at once.

Is this contingency common?
It is more common in balanced or buyer’s markets, less so in competitive seller’s markets.

What is a kick-out clause?
A clause that allows sellers to continue marketing the property and accept backup offers while a contingency is in place.

Can sellers refuse a home sale contingency?
Yes, sellers can reject or counteroffer without the contingency.

What happens if the buyer doesn’t sell their home in time?
The buyer can cancel the contract without penalties if the timeline expires.

Does a home sale contingency hurt my chances of getting a home?
Yes, in competitive markets it may weaken your offer compared to non-contingent buyers.

Can I still include an inspection or appraisal contingency?
Yes, buyers can include multiple contingencies in a contract.

What alternatives exist to using this contingency?
Bridge loans, HELOCs, or selling the current home before making a new purchase.

Are home sale contingencies legally binding?
Yes, once included in a signed contract, they are enforceable under real estate law.

Related Terms and Concepts

• Contingency: A condition in a real estate contract that must be met for the transaction to proceed.

• Kick-Out Clause: A seller’s protection allowing them to keep marketing the property during a buyer’s contingency.

• Bridge Loan: A short-term loan to finance a new home while selling the old one.

• HELOC (Home Equity Line of Credit): A revolving line of credit secured by home equity.

• Earnest Money Deposit: A deposit showing the buyer’s commitment to a transaction.

• Buyer’s Market: Market conditions favoring buyers, making sellers more likely to accept contingencies.

Wrap Up – Buyer’s Home Sale Contingency

A Buyer’s Home Sale Contingency offers buyers critical financial protection by making the purchase of a new property dependent on selling their current one. While this clause reduces the risk of double ownership, it can weaken offers in competitive markets and prolong negotiations. In 2025’s dynamic real estate landscape, buyers must carefully weigh the advantages of protection against the disadvantages of reduced bargaining power. Sellers, too, should evaluate such contingencies strategically, balancing security with the desire for a smooth, timely sale.