02/21/2023
First right of refusal, escape clause, back up offer, OH MY! 🙈
Are you familiar with these terms or does the mere mention of them make your brain spin?! 😵💫 Never fear, today we are going to break down how to include a condition in your offer related to selling your own home or a first right of refusal!
In the height of the sellers’ market this (as with most conditions) was a complete no go but with current market conditions, they have become more common again! This condition works slightly differently than a regular condition as it has multiple moving parts and means the sellers can continue to actively market their property for sale versus marking it as conditionally sold. The way the clause is worded, it gives the buyer a certain amount of time to sell their property (generally around 1-2 months) and therefore limits the risk for the buyer of owning 2 properties at once. During this time period, if the sellers do receive a new offer, the original buyers would have a certain amount of time, detailed in the escape clause, (usually around 24-48 hrs) to decide whether they want to remove their condition and firm up or if they are unable to take the risk of not being able to sell their current property and walk away. The sellers would then be released from the original offer and firm up on the second offer, also known as the back up offer, with the new buyers.
First right of refusal offers are complicated no matter what angle you are coming from; as the original buyer, the seller or the new buyer offering on a property that has a first right of refusal in place. Make sure you seek the advice of a knowledgeable real estate agent who can talk you through this situation from all sides so you don’t get caught in an uncomfortable situation!!
