How Do Kick-Out Clauses Work in Arizona?

Whenever a seller puts a property on the market, their dream of a real estate jackpot begins. The seller imagines strong offers flooding in, homebuyers competing, and the sale happening within days.

We hate to break it to you, but reality rarely plays out this way.

Sometimes, offers come with strings attached, and closing occurs after months of delays.  In Arizona, this clause protects sellers from real estate nightmares. Let us tell you everything you need to know.

What Is a Kick-Out Clause?

This is a contract provision that enables sellers to confidently accept an offer from a buyer who still has some “homework” to do while keeping the house available for others. Should a second buyer swing by with a better deal, you give buyer #1 a choice — step up or step aside.

Here’s how it works:

1. Step 1: You Say Yes To a Contingent Offer. A homebuyer falls in love with your place but cannot purchase it until they sell their current home. You agree and add a kick-out clause in the contract.
2. Step 2: Your Property Stays Listed. Inform other buyers about your “contingent with kick-out” listing, so they know they can still check it out and present an offer.
3. Step 3: Receive a Backup Offer. Maybe someone knocks on your door, ready to pay cash or with no conditions at all. You realize you would rather transact with them.
4. Step 4: Give the Original Buyer a Deadline. Gives the original homebuyers a window (usually 72 hours) to remove their contingency and proceed with the sale.
5. Step 5: Sell To Buyer #1 or Buyer #2. If the original homebuyer fails to meet the deadline, kick them out of the deal and go for the backup offer.

These clauses on properties are for you, the seller, and your homebuyers. You don’t get stuck, and your buyer gets the chance to make things work.

When To Include It

You don’t need a kick-out clause every time you sell houses in Arizona. However, if the following hitches are involved, you might want to reconsider.

Contingent Offers

A contingency is a condition both parties must fulfill before a sale goes through. For example, a homebuyer will only buy if they successfully secure financing or the home passes inspections. Without these you have to wait and miss out on other homebuyers who might be more reliable.

Financing Risks

Life can be messy. Lenders could raise red flags, investments may dip, and all sorts of unfortunate money matters can occur. With a kick-out clause, you safeguard yourself. You do not lock in with one buyer whose financial situation might collapse, welcoming others with a stronger footing.

Seller’s Markets

When there are more homebuyers than homes for sale, you want to make sure you take all the opportunities to secure the best deal. These can help you meet more homebuyers and earn more!

Note that Arizona does not guarantee a seller’s market. In Phoenix alone, the median list price hovers around $510,000, but properties are selling closer to $469,000. That gap tells us that buyers have leverage.

Tight Timelines

How long does it take to sell a house in the state? A median of 67 days. In Phoenix, you can expect a sale to take 54 days. This might not sound too long for those who don’t mind waiting over two months, but maybe you’re relocating for work or facing financial pressure. Every day counts, and a kick-out clause helps avoid delays.

What Are the Pros and Cons ?

Like most things in real estate, a kick-out clause comes with perks and pitfalls. For homebuyers, it delivers some breathing room, allowing them to put in an offer even if they are still finalizing other plans. However, it also keeps them on their toes, as another buyer could show up at any moment.

For sellers, just because you have accepted a contingent offer does not mean you disappear from multiple listing services. You are not cornered, and every conversation amplifies your voice. Kick-out clauses might also inspire buyers to make a move sooner rather than later.

So, what are the drawbacks?

Well, the clause adds complexity to paperwork. You and your agent will have to stay on top of notices, deadlines, and legal language. Moreover, backup buyers can back out after you accept their offer.

When a homebuyer decides they are not willing to handle the repairs gone wrong or the cleanup your dirty house requires, they may walk away and leave you with zero options.

Should You Use One  in Arizona?

These demand careful thought. The clause is incredibly advantageous but it could also be why closing becomes impossible. As such, the smartest move is to study your local market.

If sellers are more powerful, make the most of your position! Then, evaluate your buyer’s financial situation closely. Do they truly have the resources to purchase your place? Or are they banking on a shaky transaction of their other properties? Think about your standing and determine whether theirs will support it.

Lastly, explore alternatives. The traditional selling method is established, but it is not always the best route. Cash buyers like 72SOLD and Doug Hopkins buy directly from sellers, promising no contingencies or setbacks. Whether you have a mobile home or the most unsellable rental, these companies will work with you.

Skip the Clauses and More With Doug Hopkins

Selling houses is stressful. You worry about finding the right luxury agent, paying taxes, and more. At times, the last thing you want to deal with is complicated kick-out clauses.

At Doug Hopkins, we simplify your journey. Our team has served countless homeowners in Arizona, only taking three steps to realize real estate dreams:

1. Step 1: Tell Us About Your Property. Call (602) 567-1505 or submit your information online. We will schedule an in-person visit based on your calendar.
2. Step 2: Receive a Fair Cash Offer. We assess your house and present an offer reflecting its condition and value according to the local market. Our offers are free and zero obligation!
3. Step 3: Close On Your Terms. Do you want to close in as little as seven days? Let our team know, and we will prepare. All that is left to do is get your cash.

Doug Hopkins believes sellers shouldn’t feel any pressure. You shouldn’t settle for a timeline that derails your plans or an amount less than you deserve. Most importantly, you should not stress about a kick-out clause that could work against you.

Doug Hopkins is your homebuyer, no matter what happens. Request an instant cash offer and experience the ease of selling now!

Frequently Asked Questions About These in Arizona

Let’s summarize the power of a kick-out clause in Arizona and your options as a seller.

What Are They?

They are contract provisions that enable sellers to accept contingent offers while keeping their homes on the market. Depending on your agreement with a homebuyer, they get 48 or 72 hours to act if another buyer steps in.

For instance, say you’re selling a residence in Tempe. A homebuyer offers your selling price, stating they will finalize the sale only after their lender approves them for financing. It is a relatively reasonable offer, so you say yes, but stay open to better ones.

If someone else shows up ready to pay cash two weeks later, inform the original homebuyer and use the kick-out clause to determine your next move.

Can Homebuyers Back Out in Arizona?

Yes, buyers have the right to back out in Arizona after you accept their offer. They often do when their financing falls apart, inspection results scare them off, or they find another house.

For sellers, a backup buyer backing out means you have to start over. Since you already kicked out buyer #1, you must search for new buyers, re-list, and reset expectations. The process, then, drags on.

What Should You Do if You Receive a Backup Offer?

If a backup buyer comes in, you cannot simply allow them to swoop in. You must notify buyer #1 and follow the agreed-upon timeframe. They either remove their contingency, and you sell to them, or they back out, and you sell to buyer #2.

Should Sellers in AZ Use These?

A kick-out clause is absolutely worth considering, especially when contingencies, financial risks, and tight timelines are involved. It is also helpful if you are selling in a seller’s market. However, you must be willing to take on more paperwork, which could increase agent commission rates.

How Do I Sell Without One?

A good alternative is selling to cash homebuyers like Doug Hopkins. Our company saves you from uncertainties by buying your home as-is. There’s no need to fix anything, pay for closing costs, or figure out  clauses. Show us your place, and we’ll take care of the rest if you want to sell my house fast Phoenix. Call (602) 567-1505 or request an offer online.