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With bump clauses, sellers can keep shopping for better buyers

Keep your bird in the hand while continuing to search for others in the bush. That’s what you get with a bump clause.

In home sales, a bump or “kick out” clause lets sellers enter into a contract while continuing to seek out alternate buyers. If the sellers get a better deal, they can bypass the original buyer.

Typically, bump clauses are used when the buyer has a home-sale contingency. Buyers sign a contract and submit a down payment and then have a certain amount of time to satisfy the contingency. In the meantime, the sellers continue marketing the property.

If the sellers get a better offer before the deadline, the original buyer gets a final chance to waive their contingency. Bump clauses may also be used in cooling real estate markets when sellers still want to hold out hope for a better offer.

Before bumping an offer, do your due diligence. Make sure the second offer is really stronger than the first and that the second buyer is more likely to be able to close.

Buyers subject to a bump clause should think carefully before waiving a contingency. Be sure you can complete the deal with financial security. You risk losing your down payment if you can’t complete the purchase.

No matter who requests the bump clause, enlist help from an experienced real estate attorney to draft the agreement. Pay attention to the timeline a buyer has to satisfy the contingency and what, specifically, qualifies as a better offer.

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