When a seller accepts a contract, either there are contingencies or not. In simple terms, a contingency lets the buyer walk away from the deal if the specified condition is not met. A home under contract with no contingencies is as good as sold, as the only way out for the seller or the buyer is default. This is rare. Unless the buyer is paying all cash, he will usually ask for contingencies, such as financing or a satisfactory home inspection. Occasionally, a seller might accept an offer contingent on the buyer selling his current home.
Most Contingencies Favor the Buyer
Most contingencies let the buyer, but not the seller, cancel the contract if the contingencies are not settled in the manner outlined in the contract. For example, a home inspection contingency lets the buyer cancel the contract if the professional home inspector spots any major repair issues. In most cases, the seller can only sit back for the agreed period of time and wait for the buyer to satisfy the contingency. The seller cannot "kick out" the buyer and accept an alternative offer while the property is under contract. When the seller participates in an offer of this nature, the property's status becomes "CNTG/NO KO" on the multiple listing service.
Contingencies with a Seller Kick Out
Sellers do not want to wait around forever for the buyer to make good the contract contingency, so contracts with a contingency that could go on indefinitely, such as a contingency for the sale of the buyer's home, often come with a "kick-out" clause. In this scenario, the seller accepts the buyer's offer but continues to market his house. If the seller receives a more appealing offer, he can give the first buyer a short amount of time to remove the contingency and move towards closing, whether the buyer's house is sold or not. If the first buyer cannot comply, he is "kicked out" from his primary position, and the second buyer wins the deal.
Good News for Prospective Purchasers
Kick out clauses are a compromise between the seller and the buyer. They make a home sale contingency more palatable than it would be without the kick out. For would-be buyers, a home listed "CNTG/KO" is not yet sold. It is always worth putting in your own offer -- one that is not subject to a home sale contingency -- which triggers the kick out provisions of the first offer. You will usually know within 72 hours whether the first buyer can release the contingency and rescue his deal, or whether your offer will come up trumps.