In today’s market, a fair number of purchase offers are written on the condition that the buyer sells their home.
In other words, the buyer is saying, “I’ll buy your home if I sell my home,” within a given period of time, say 40 to 60 days.
On that basis, an additional clause is inserted in the offer called an “Escape Clause”. It allows the Seller to continue to market his home for sale to other potential buyers.
Should the Seller receive another offer, he can then notify the first buyer who now has anywhere from 48 to 72 hours, depending on the contract, to pursue 1 of 2 options:
- Remove his condition(s) and buy the home, or
- Opt our of the deal through a mutual release.
In such a scenario, the 2nd offer is accepted on the condition that the Seller is released from the previous accepted offer. This protects the Seller from selling to two buyers. If buyer 1 buys the property, buyer 2’s offer becomes null and void; if buyer 1 releases, the seller sells his home to buyer 2.
Sounds simple enough and in most cases it is. However, any number of situations may arise. For instance:
- Buyer 1 was notified of a 2nd offer. Instead of removing conditions or releasing, he offered the Seller $5,000 more to keep his offer in place. The Seller accepted.
- Within the same time frame that a 2nd offer was received, buyer 1 offered the seller an amendment to the contract as he was now negotiating a sale on his house.
This revision removed the Sale Condition and the “Escape Clause” from the agreement. In turn, it added a clause making the offer conditional on the buyer negotiating a successful sale of his home within 14 days. The Seller accepted the amendment and countered the 2nd offer with a condition of being released from the 1st offer within the same 14 days.
- Though rare, a 2nd offer can come in that’s also conditional on the sale of the buyer’s home. Yet it can be a better offer if the property the buyer is selling is more saleable—market priced and within a high demand price point . This too can trigger the escape clause, notifying buyer 1 to remove conditions or release.
A skilled and experienced hand can steer you in the right direction and result in the successful sale of your home.