What Is a Home Sale Contingency?

A home sale contingency allows you to make an offer on a new property contingent on the sale of their current home.

If you’re buying a new home while still owning your current one, chances are you’ve heard the term “home sale contingency.” It’s one of the most common (and often misunderstood) clauses in real estate contracts, especially for move-up buyers.

As a local mortgage lender in Memphis, I work with many clients navigating this situation. Below is a breakdown of what a home sale contingency means, how it works, and the pros and cons of using one in today’s market.

What Is a Home Sale Contingency?

A home sale contingency allows a buyer to make an offer on a new property dependent on the sale of their current home. In other words, the purchase of the new home won’t move forward until the existing home is sold and under contract. This contingency protects the buyer from being stuck with two mortgage payments if their current home doesn’t sell in time.

How It Works in a Real Estate Transaction

• The buyer makes an offer on a new home with a home sale contingency written into the contract.

• The seller can accept, reject, or counter based on the buyer’s situation.

• If accepted, a timeline is established (typically 30-60 days) for the buyer to sell their home.

• Some sellers include a “right of first refusal,” or "kick-out clause" allowing them to keep marketing the home. If the seller receives a non-contingent or stronger offer, they must give the original buyer a chance to remove their contingency (often within 24–72 hours).

• If the original buyer can’t remove the contingency, the seller has the right to "kick out" that buyer and move forward with the new offer.

Pros of a Home Sale Contingency

For Buyers:

• Financial safety net – You don’t have to carry two mortgages at once.

• More down payment – Selling your existing home gives you access to your home's equity for down payment on the new home.

• Avoids temporary living arrangements – You won't have to make temporary living arrangements since you can continue to live in your current home and move directly into the new home when the transactions are closed.

For Sellers:

• Keeps your home under contract – You secure a committed buyer, even if there’s a delay.

• Backup options available – With a kick-out clause, you can accept stronger offers if they come in.

Cons of a Home Sale Contingency

For Buyers:

• Less attractive offer – Sellers may choose non-contingent buyers who are ready to close faster.

• Tighter timelines – If your home doesn’t sell quickly, you could lose the home you want.

• Additional stress – Managing two transactions at once can be complex and emotionally draining.

For Sellers:

• Uncertainty – Your sale depends on the buyer’s success in selling their own home.

• Potential delays – Contingent deals can take longer to close.

• Back-on-market risk – If the buyer’s home doesn’t sell, your home goes back on the market, which could impact perceived value.

Tips from a Mortgage Lender

If you’re planning to buy a home with a sale contingency, here’s how to strengthen your offer:

• Get pre-approved before listing your home so financing is ready to go when it’s time.

• Price your current home competitively to improve your odds of selling quickly.

• Work with a lender and real estate agent who can coordinate both transactions and communicate clearly with all parties.

Final Thoughts

A home sale contingency can be a smart financial move—but it’s not without risk. The key is planning ahead, understanding the market, and aligning your financing and selling timeline.

Whether you're the buyer or seller in a contingent deal, make sure you’re backed by a lender who can move quickly and guide you through every step.

Have questions about how a home sale contingency might affect your mortgage or next move? I’d love to help you make a game plan that works.