A kick out clause refers to language in the contract which permits the seller, in some cases, to cancel the contract with the current buyer.  The current buyer is “kicked out” of contract.

Another expression for the same idea is a “release clause” – the seller can release the buyer under some situations.

When can the seller kick out or release the buyer? 

• If the contract is subject to the sale of another home, there may be a release clause in the agreement stating that if the seller gets a better offer, the buyer may have 72 hours to perform (sell the home) or be let go.  Normally buyers do not begin spending money on reports, inspections and the appraisal until this contingency is removed, so there tends to be little risk for either party.
• With bank owned homes, several lending institutions want to keep offering the home for sale even after there’s a ratified contract so that they keep open the possibility of the home selling for more. It is understandable that they want to mitigate their loss, but it makes buyers in contract very nervous about spending money on appraisals and inspections!  Most of the “risk” is on the buyer’s side.
• If there’s a short sale, the seller has a contingency for bank approval.  If a better offer comes along while waiting for bank approval, the seller can usually release the buyer without much difficulty.

This concept is not usually automatically found in purchase agreements unless it’s a bank owned, short sale or contingent upon the sale of another property deal

Do you really want to buy a Silicon Valley home, or do you just want to write offers to see what will happen?  Some folks, who appear to resemble serious home buyers, write offers that are riddled with reasons why the seller should reject their offer, or at the very least write a very tough, high counter offer in response.

What kinds of things in a purchase contract make a bad impression on home sellers in the San Jose area?  Here’s  a list of things buyers (or their agents) have done I’ve seen recently which turned the tone negative when it didn’t have to be:

• On the good faith deposit check, don’t write the name of the title company.
• On the memo section of the check, write something vague or possibly nasty, such as “deposit for budget property”.
• On the contract, don’t write the seller’s name anywhere. Instead, write “Owner of Record”. Sounds like a bank owns it, but no matter what, it indicates that you don’t care who owns it.
• On the contract, omit the listing agent’s info in the agency confirmation and offer signature pages.
• Make a low offer, and if you are countered up in price, counter back to your original price.
• If the seller indicates that your offer is being reviewed favorably and that the seller is probably going to take it, ask the listing agent “is there any room still to negotiate?” and promptly cancel and submit a new offer which is 10% lower.
• Write offers on more than one property at once – even though you can only purchase one.  (That’s called “acting in bad faith”, even if it is a short sale.)
• Ask the seller to pay for everything, even items which are normally paid for by the buyer.
• If the MLS says that something is omitted or excluded from the sale, don’t mention it in your contract.
• If the MLS provides information on disclosures, inspections and reports, don’t bother looking at them before you write and submit your offer.

I’ve seen all of these just in the last couple of months.  Buyers and their Realtors need to remember that buying and selling houses, condos and homes in Santa Clara County (and everywhere else) is emotional as well as a business decision.  Being rude, inattentive, uncaring and generally not following instructions is not a good negotiation strategy!

The offer is the courting period.  If you are not polite and professional then, what will you be like in escrow?  Your offer is your first impression. If you want to buy real estate, make it a strongly good impression!