Gambling with home sale contingency and right of 1st refusal

If you are selling your home in Massachusetts it is possible you may see a buyer try to purchase your home with a home sale contingency.

In other words they write into the Real Estate contract that they will not have to proceed with buying your home unless they successfully close on the property that they currently own. Accepting this arrangement 99% of the time is a big gamble and probably a very big mistake!

The thought of ever recommending one of my seller clients accept an offer contingent upon the sale of another property is just down right fool hardy. Just to be clear, it absolutely makes no difference what kind of Real Estate market we are in either. It could be a seller’s, buyer’s, or neutral Real Estate market but that does little to change the appeal of a home sale contingency.

An offer contingent on another property closing means one thing – YOU LOSE CONTROL OF THE PROCESS!! With no guarantees of anything.

Don’t be lulled into considering this arrangement if a buyer woos you with a full price offer either because if you never make it to the closing table what good does it do you?

As a home seller here are a few things to consider:

  • How do you know if the contingent home is priced correctly?
  • What if the property is not priced properly and the seller does not drop their price?
  • What if the agent marketing the home is lousy?
  • What if the home has issues discovered at a home inspection that can not be overcome?

Is the picture starting to become clearer on why a home sale contingency is not a good idea? When you agree to accept a home sale contingency your home is off the market and you are at the mercy of the contingent home selling.

As someones trusted Real Estate adviser there is only one circumstance where I could feel good about one of my seller clients accepting this type of arrangement.

If I was marketing an extremely difficult property to sell and the person making the contingent offer had a much more salable property then I would possibly guide my seller client into considering a contingent sale.

For example, lets say the home I was marketing had some form of Real Estate functional obsolescence that made it a difficult property to sell. Lets also assume the contingent home happens to be located in a highly desirable area of town and is in mint condition. The only obstacle left in this situation is making sure the contingent home was going to be priced right. If that criteria was met this would be something a seller may want to consider as long as they were getting a fair offer on their property.

Remember too that as a seller when you accept a contingent sale you are relying on a different Realtor that you may or may not know to see this transaction through to a successful conclusion. Working in this field on a daily basis I come across a wide variety of Real Estate agents. Some are very good and others you would not want to wish on your worst enemy! This could become a key consideration in your thought process.

If not a home sale contingency what about a “right of 1st refusal”? On a number of occasions over the years, after being rebuffed on a home sale contingency the buyers agent has tried going down the road of asking for a right of 1st refusal instead.

I find that many Realtors do not even truly understand what a right of 1st refusal is! When you allow a buyer that can’t purchase a home without selling their own (contingent sale) to have a right of 1st refusal you are doing your seller client a tremendous disservice.

When I am marketing a home and a legitimate buyer comes along that wants to purchase this property, the last thing I want is to cloud the negotiations by telling them we must wait 24-48 hours (the typical time allowed) to give another buyer their “1st right of refusal”. Why on earth would I want to be required to call another buyer who doesn’t qualify to purchase the house without selling their own home to ask them if they would like to exercise their “right of 1st refusal”? The only way this should be done is if the buyer has some skin in the game and risks losing their earnest money deposit if they do not complete the sale.

Not accepting right of 1st refusal

This is pointless waste of time! I have found that some Realtors advise their clients that this arrangement is acceptable out of pure stupidity or because it gives them a small sense of accomplishment even though they have accomplished nothing.

Allowing a buyer who doesn’t qualify a right of 1st refusal could cause the seller to end up with nothing if a ready, willing, and able buyer walks away out of frustration.

The only time you should consider allowing a right of first refusal is if the buyer qualifies to buy without selling their existing property or they are willing to waive any rights to using a mortgage contingency clause stipulating they must sell their home as a means of escaping the contract. Without the buyer willing to do these things why would a seller want to consider this scenario?

Another scenario to consider is if the buyer exercises the “right of 1st refusal”? You could certainly add language that says this buyer would forfeit their deposit if they did not close as stipulated. What a seller needs to consider is if it’s worth losing the buyer that could have purchased the home without any of this mess?

Is keeping a buyers deposit enough to mitigate a lost buyer that could have closed? My answer would be NO especially if the Real Estate market was week and values were declining.

The only time it would make any sense to accept a right of 1st refusal is if the buyer did not have anything to sell and could step forward to purchase right away if the seller required them to do so.

When you come right down to it how does a right of 1st refusal benefit a seller other than making them feel good a potential buyer is interested? There is only a benefit when they buyer can close without a hitch. When a buyer is able to purchase they can always come back at that point anyway!

So if you don’t want to lose control of your home sale process stay away from contingent sales. If your home is not selling you can always reduce the price to attract more buyers and get the property sold in a timely fashion.


About the author: The above Real Estate information on Massachusetts home sale contingencies and right of 1st refusal was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 28+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Upton, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.