Bernadette asks:
We received an offer from a nice couple, but they cannot afford to buy our property unless they first sell their current property. We would like to work something out with them, because we haven't had that many good offers. But we are concerned about taking our house off the market for an indefinite period of time, while the buyers try to sell their house.
How can we accept their offer AND keep marketing our home?
Dear Bernadette,
No seller likes to risk their own sale on the ability of some buyer to sell their own property. But most people have to sell to buy, nowadays.
House prices have increased dramatically during the last few years, which means that more and more buyers find that they can only qualify to buy a more expensive house if they first sell their current residence. "Subject to sale" contingencies have therefore become a fact of life for sellers of South African real estate.
A subject to sale contingency is a contract clause used to allow buyers who still need to sell their current property to make an offer to purchase a new one so long. It functions as a suspensive condition, meaning the sale "hangs" or is "suspended" untill the buyer is able to sell, or until a certain period of time has passed. If the buyer is unable to sell their property, then the contract to purchase the new property becomes null and void and the purchasers are entitled to a full refund of any deposit they might have paid.
The subject to sale contingency will allow your buyers to make an offer, but the problem is still that you could be doomed to try and get back in the market after the contingency period has lapsed, because your nice couple were not able to sell their property after all.
But rest asured: You are definitely not the first seller who does not want to take his/her property out of the market for an indefinite period. And that is why the smart people with long lists of qualifications thought up a nifty little contract clause called the "72-hour clause".
The 72-hour clause is a compromise that allows sellers to accept contingent offers to purchase, while still keeping their property in the market. Any seller can add a 72-hour clause to their sales contract, simply by adding language to the real estate sales contract stating that, while they are willing to accept a contingent contract, the property will still be marketed. If a buyer who can make a non-contingent offer is found, the seller will give the current purchaser a certain amount of time (usually 72 hours) to fulfill the contingency or exercise the contingency and cancel the purchase.
Some people call the 72-hour clase a "kick-out clause". But I don't like the term, because it sounds like the sellers really want to "kick" the contingent buyers out of the sale, and this is not usually the case. Sellers want to sell and a 72-hour clause helps them to do just that. If the contingent buyers are able to fulfill the contingencies of the purchase contract, the sellers will gladly sell to them.
A 72-hour clause must be carefully drafted. You don't want your buyer to simply declare the contingencies fulfilled and then, when push comes to shove, they just don't have the finances to complete the purchase. You can read more about drafting your 72-hour clause in the RealFact.net article - Wording a 72-hour clause.
