This is the second part in a series about tools that sellers have at their disposal to help manage a simultaneous purchase and sale of property. Click here to read the first post in the series about Home Sale Contingencies.
Another contract clause available for use to help manage both a purchase and sale is a “Home of Choice Contingency,” sometimes abbreviated at HOC and also known as “Contingent on the Seller Purchasing Another Home.”
This is a particularly useful clause when a seller believes that it will take longer to sell their current home (“Old House”) than it will to find a new home that they want to buy (“New House”). Most sellers are always on the lookout for their next property, but if the average days on market for sales is high in your area, you may need to get a head start on listing before you put a contract in to buy.
This contingency allows a seller to accept a contract on their current home, but provides for a negotiable number of days in which the seller can go out and negotiate an acceptable contract for themselves on New House. If the seller fails to find New House, then the seller has the option to void the contract if it’s within the contingency period. If a seller hasn’t been looking at homes along the way, it’s unlikely that this brief contingency period will be helpful, but if a seller has already been touring homes, and has a favorite in mind, this is usually just what they need to make sure they can get both the sale and purchase locked in at the same time.
It’s important to note that in our standard NVAR addendum, this contingency automatically expires at the end of the negotiated number of days unless the seller gives notice to the purchaser, so pay attention to those deadlines!
Tip for Buyers: If your contract has a home of choice contingency, you may wish to negotiate a provision for the seller to reimburse you your actual out of pocket costs for inspections, appraisals, etc., if the seller exercises their right to void.
Disclaimer: This post is not intended as legal advice. Consult your agent or attorney if you need assistance with contract clauses or negotiations.
Read and Learn More:
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