What's the new symbol? Sam explains.
Sam Schneiderman, Broker-owner of Greater Boston Home Team discusses the fairly recently added “kick-out” emblems that now shows up in MLS. What's is that clock symbol and what does it mean?
A “kick-out clause” (a/k/a “bump-out clause”) is a clause in an offer or Purchase and Sale agreement stating that a seller can effectively kick the buyer out of the deal if another buyer comes along with a more appealing offer. That could mean an offer with a higher price and/or better terms, or any other criteria that the parties agree to in writing.Our local MLS service (MLS-PIN) recently added a “kick-out” emblem that looks like a little clock next to the ACT. It appears that not all agents and buyers understand what it means yet. Unlike the red “active” indicating that a seller is looking for backup offers in the event that the current buyer does not satisfy some contingency in the future, a kick-out notation indicates that a seller is ready to bump the current buyer out of the deal now in order to do business with a buyer that makes a more appealing offer. (Note that the offer does not always have to be better in price. Sometimes timing or other terms can create a more appealing offer. Sometimes, it’s just about price.)
Kick-out clauses are especially useful for move-up buyers that want or have to sell their current property in order to buy the seller’s property. They could also be used for any other situation that a buyer and seller agree to. By using a kick-out clause, a buyer can put their new home under contract, apply for financing and know that they will have someplace to go when they sell their current home.For sellers, a kick-out clause allows them to accept a good offer on their home and still continue to market the property so that they can solicit and entertain other offers in the event that the first buyer does not meet the conditions agreed to. If the seller gets a more appealing offer, the first buyer usually has one to three days to decide if he wants to cancel the contingency (thereby putting the first buyer’s deposit at risk if he does not close when agreed) or get kicked out of the deal so that the new buyer can step in. If the first buyer backs out, his deposit is usually returned, depending on the agreement. That is usually the case and the seller is then free to move forward with the new buyer.
Have you ever been involved in a transaction with a kick-out clause? If so, what was your experience?
If you’ve never been involved in such a transaction, can you see the benefit to using a kick-out clause?
Is there any reason that you would shy away from getting involved with a kick-out clause?
Attorneys, I’d especially like to get your comments on this topic.
