Real Estate: What is a Bump Clause?

Posted on: October 18, 2019

What is a Bump Clause and How Does it Work?

A bump clause lets sellers enter into a contract with a buyer while continuing to market the property. If the sellers get a better deal, they can “bump” the original buyer.

The bump clause is most commonly used when a buyer’s offer has some contingency, usually that they need to sell their current home first.

So, if you’ve made an offer that is contingent on the sale of your home (a “contingent offer”) then you may be subject to the bump clause. The bump clause is built into the contingency form, which says that if another buyer—who is not contingent on the sale of a home—makes an offer, then the seller has the option to either give you (the original, contingent buyer) a very limited number of days to sell your home, or they can remove you, or “bump” you, from the picture altogether.

The Bottom Line

It is never a good situation to bump somebody out or to be bumped out, but it is a protection for the seller of the home to make sure that their transaction with the buyer isn’t going to drag on for months and months. If there is a different viable buyer that can close faster, the seller will then be able to proceed with this new buyer.

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