Landlords get tired. Heirs inherit houses that they are not sure how to maintain. Homeowners sometimes just want to move on. Unfortunately, selling properties in New Hampshire can be confusing, especially when you already have a buyer lined up, but a better one knocks on your door. These situations demonstrate the value of a kick-out clause.
What is this clause, and when should you use it?
We are here with answers.
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What Is It?
They are contract provisions that work as a safety net for sellers with buyers who really want their properties but are not quite ready to sign the papers. Instead of turning them away because they need to sell their own house first or finalize their financing, you accept their offer but keep your options open in case you really must move forward.
Here’s how you use the clause:
- Step 1: Accept a Contingent Offer. Agree to a buyer’s terms and add a kick-out clause to the contract. The buyer knows how soon they should push through with the sale, and you know you may let them go anytime.
- Step 2: Keep Your Property Listed. You have accepted the contingent offer, but your listing remains online as “contingent with kick-out.” Other buyers scrolling through will still see your house, tour it, and make offers.
- Step 3: Receive a Backup Offer. When another buyer comes with cash or zero contingencies, you might wish to sell to them instead. Weigh both buyers’ offers up and determine the better deal.
- Step 4: Inform Buyer #1 About the Deadline. Tell your original buyer that someone is eager to call your house theirs. Through the kick-out clause, they have the opportunity to remove their contingency within 72 hours.
- Step 5: Sell. If buyer #1 can meet the deadline, great! If they can’t, the clause gives you the freedom to transact with buyer #2.
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The Advantages and Disadvantages
They are an absolute win-win. As a seller, you’re not stuck waiting forever for a sale to happen, and buyers may realize their plans without rushing. However, these clauses also have their drawbacks. For instance, buyers are never entirely secure, as they could lose their dream house to others at any time.
Sellers could use the clause to prompt hesitant buyers to act more quickly, but that also means more notices, deadlines, and contract language to understand and track. Moreover, backup buyers may walk away, deciding they would rather spend a fortune on a new place than save up for an older structure.
One day, people could be fighting over your property; the next, you’re trying to catch people’s attention again.
When To Include a Kick-Out Clause in New Hampshire Real Estate
No, you are not required to include kick-out clauses when selling real estate in New Hampshire. It is optional and most helpful in the following circumstances.
Buyers With Contingent Offers
A “contingency” is a condition you and your buyer must meet before the sale closes. The most common examples are selling current residences or rentals, passing inspections, and securing financing. Without it, your house might sit in the market longer than you wish and miss out on other profitable opportunities.
Buyers With Financing Concerns
What if the lender hesitates? What if your buyer’s investments dip? What if credit issues pop up out of the blue? Kick-out clauses protect you from a financial future that may collapse. When someone’s financial standing proves to be more stable, you are allowed to change your footing as well.
Selling in a Seller’s Market
Are there more buyers than homes in your area? You have the upper hand as a seller. Buyers will compete against each other, and you will make the choice. These ensures that everyone knows you are open for business, but only with those who are committed to doing so.
Right now, New Hampshire is in an interesting spot. Housing inventory has increased compared to January last year, with the total months of supply at 2.4, up 9.1% from 2.2 months. Mortgage rates also hover around 6.3%, making the average payment about $3,650. That figure is $905 higher than a year ago.
Selling With Tight Timelines
The median time to sell properties in the state is 41 days. For those selling to pay medical bills, cover legal fees, or relocate after a job promotion, this timeline is impractical. Kick-out clauses point you toward buyers who can help you with your deadlines. As long as backup buyers do not back out, you will keep the ball rolling!
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Should You Include them in Your Selling Process?
A kick-out clause is not something you add just because. It is a beneficial tool, but it also demands extra management. Include it, and your real estate agent will ask for additional compensation!
So, look to your local market for guidance. When the market favors sellers, go for the clause. But if it is more balanced or leaning toward buyers, you might scare them off with too many conditions.
Evaluate your buyer’s financial situation, too. Are they truly capable of closing, or are they relying on a shaky deal for their own homes? It’s best to know who you’re dealing with upfront, even when you have a financial shield.
Finally, consider alternatives. The traditional selling method may be your go-to, but cash buyers, such as NH HomeBuyers, also have their advantages. These companies purchase houses directly, never involving contingencies in the process. Kick-out clauses, then, are not essential at all.
Simplify Your Real Estate Journey With NH HomeBuyers
NH Home Buyers is a family and veteran-owned real estate business, founded in 2017. Our team has acquired hundreds of homes across New Hampshire and Massachusetts since, purchasing even those with code violations and deed problems as-is. No matter the conditions of properties, we want them!
Skip the kick-out clause and take the following steps:
- Step 1: Submit Your Details. Call NH Home Buyers at (603) 421-6868 or contact us online to share your information. You can count on our team to reach out to you immediately and schedule an in-person visit.
- Step 2: Receive a Fair Cash Offer. On the day of our assessment, save time, money, and energy by leaving your space as it is. Our experts will present a cash offer based on the property’s condition and local market.
- Step 3: Close ASAP. We can close in as little as seven days, but please let us know if you have a different timeline and need a few weeks. Have us on board with your plans, and we will handle the rest. Simply sign and get your cash.
Trust NH HomeBuyers not to oblige you with anything. Our services are free, and your acceptance means you are the boss. You decide if the price is right and when the sale must take place.
Forget about kick-out clauses. Request an instant cash offer from NH Home Buyers for a speedy, easy selling experience.
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Frequently Asked Questions
Are you still unsure whether to add a kick-out clause? Or are you interested in working with cash buyers in New Hampshire? Let’s summarize everything discussed above through these questions and answers.
What Is a Kick-Out Clause in New Hampshire?
Kick-out clauses are contract provisions that enable sellers to accept contingent offers while their houses stay on the market. Original homebuyers usually have 72 hours to remove their conditions after a backup buyer steps in.
What Is an Example of a Kick-Out Clause?
You sell a property, and a buyer offers your full asking price. They also say they need their lender’s approval first. You think it is reasonable, so you accept, but add a kick-out clause. A week later, another buyer finds your place, inquires, and states that they can close immediately.
Through the kick-out clause, you can notify buyer #1 that they have approximately 72 hours to obtain their lender’s approval. Should they fail, buyer #2 becomes the buyer.
What Should I Do If I Receive a Backup Offer in New Hampshire?
Do not just switch homebuyers on a whim. If a backup buyer comes along, you must notify buyer #1 and provide them with the agreed-upon timeframe. They can either remove their contingency and purchase or step aside and allow you to sell to buyer #2.
Should Sellers in New Hampshire Use Kick-Out Clauses?
Kick-out clauses are worth considering if you receive offers with contingencies, meet buyers with financing concerns, or are selling with a tight timeline. These clauses are especially valuable in a seller’s market! However, you must prepare to handle more paperwork and pay higher agent commissions.
How Do I Sell Without a Kick-Out Clause?
A good alternative is selling to cash buyers, such as NH Home Buyers. We purchase homes as-is, requiring no repairs or closing costs. There is no need to figure out kick-out clauses! Show us your property, review our figures, and then hand over the keys whenever you’re ready.
Get in touch with us to learn more about our services. Dial (603) 421-6868 or request a free cash offer online now!
