Real Estate Investing

What You Need to Know About Home Sale Contingencies

May 28, 2024

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Home Sale Contingencies 

Navigating property ownership transfers can be complex, with possible pitfalls littered throughout the process. For this reason, it’s important to build “fail safes” into your purchase agreements to facilitate the smoothest ownership transfer. 

A home sale contingency is one such fail safe every purchase contract should include. 

From navigating sale and settlement contingencies to managing mortgages, liens, and other potential challenges, being informed is key to a smooth real estate transaction. 

This article will guide you through buyer and seller considerations with home sale contingency clauses, offering insights on protecting your interests and smoothly transferring ownership. 

What is a Home Sale Contingency? 

Home sale contingencies are one type of contingency clause often included in a real estate contract. The home sale contingency indicates that a property transaction will only occur if the buyer’s current home sells before the date specified in the contract. In other words, the purchase is contingent on the buyer selling their old home. If this occurs, the transaction will move forward. However, if the buyer’s home does not sell by that date, the transaction is stalled or called off completely.  

Buyer Considerations  

All buyers should ensure that a home sale contingency is included in the purchase agreement, as this clause protects them first and foremost. Having a home sale contingency in place means that the sale of your current home must happen before you can close on a new one. This can affect your timeline, finances, and the overall buying process. For example, you may need to sell your current home before you can dedicate funds to your down payment or earnest money deposit. A home sale contingency ensures that the terms and progress of your new acquisition is dependent on that critical first step. 

Seller Considerations  

As a home seller, allowing a home sale contingency to be written into the purchase contract demonstrates good faith towards the buyer and may help convince them to move forward with the sale. Your primary concern is assessing the risks associated with potential buyers and the impact on your property’s marketability. It’s crucial to evaluate the financial stability of buyers relying on the sale of their current homes to ensure that they will have the necessary funds promised for the down payment and closing costs. 

Sellers should also consider the possibility of delays or the deal falling through, which could affect your timeline and plans. Home sale contingencies can attract serious purchasers willing to wait while you deal with these delays. It’s also a good idea to negotiate favorable terms for yourself, such as a kick-out clause, to protect your interests. A kick-out clause is a provision that allows the seller to continue showing the property after accepting a contingent offer. If the seller finds another suitable buyer, the first buyer can either choose to remove their contingencies or lose the property to the new buyer. 

The seller’s real estate agent can help them keep communication open with potential buyers to stay informed about their progress. Ultimately, balancing risks and benefits is key in navigating home sale contingencies as a seller. 

Other Contingencies 

Home purchase contracts often include other contingencies besides the home sale contingency clause. These include: 

  • Appraisal contingency 
  • Home inspection contingency (sometimes called a “due diligence” contingency) 
  • Financing contingency (sometimes called a “mortgage” contingency) 

These contingencies verify that if a property  

  • doesn’t appraise for its listing price, 
  • has substantial hidden damages or repairs needed, or 
  • cannot be purchased because the buyer failed to secure financing, 

then the buyer can break the contract and is not required to proceed with the transaction. 

Writing contingencies into a property purchase agreement is a crucial step of legal protection that ensures both parties are being treated fairly and are properly informed about the property. Although you can view a home sale contingency example online, it should ultimately be written by a knowledgeable real estate agent or attorney given its legal implications. 

How Long Does It Take to Transfer Ownership of a Property? 

This varies depending on the complexity of the purchase agreement, the buyer and seller’s independent timelines, and the state or county where the ownership transfer is recorded. In general, ownership transfer of a property can take several months from start to complete finish. However, this also depends on the contingencies involved. If the buyer’s current home takes longer than expected to sell, the ownership transfer of the new property could also take longer. 

Other Tips for A Smooth Property Ownership Transfer 

Home sale and other contingencies are just one step in the process of ownership transfer. Transfer of ownership refers to the process of how legal rights to a property are transferred from one hand to another. These agreements can be used to sell a property, goods, a business, a vehicle, or even land. 

Property ownership transfer involves the seamless transfer of legal rights, encumbrances, and obligations through various means such as sale, inheritance, gift, or court orders. This process can be a complex one, so here are a few extra tips on how to make it as smooth as possible. 

  • Carefully review all crucial documents, like contracts and deeds. 
  • Conduct a thorough property title search to identify potential liens on the property. 
  • Hire a professional appraiser to evaluate property value and ensure you’re paying fairly for the property. 
  • Consider your own liabilities, debts, and other financial obligations like additional mortgages and taxes. 
  • Seek advice from financial advisors, tax professionals, or a real estate attorney due to varying tax implications based on the transfer type and local regulations. 
  • Ask questions to your real estate agent or broker when you have them. 

Remember that proper documentation, adherence to legal requirements, and understanding financial implications are key to a successful property ownership transfer. 


Now that you have a better understanding of home sale contingencies and the transfer of ownership house in home sales, you can more confidently navigate this process. 

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