Bumpable Buyer
A “bumpable buyer” refers to a prospective purchaser who has entered into a contract to buy a property, but whose offer is contingent upon the sale of their current home. This designation indicates their position in the transaction is not fully secure. Under specific conditions, the seller retains the right to “bump” them in favor of a secondary buyer who does not have a home-sale contingency.
Purpose and Function
The primary purpose of the bumpable buyer status is to balance the risks and needs of both parties in a complicated transaction.
For sellers, accepting an offer contingent on another home sale is risky. If the buyer’s home doesn’t sell, the seller’s property sits off the market, potentially losing momentum. The “bumpable” clause mitigates this risk by allowing the seller to keep their property active on the market, often listed as “active contingent” or “bumpable”, seeking a more secure, non-contingent offer.
For buyers, this status allows them to secure a contract on a new home before selling their current one, preventing a situation where they are left without a place to live. It provides a foothold in the market, albeit a precarious one.
How It Works
A specific clause governs the process in the purchase agreement, often called a “kick-out clause” or “72-hour clause” (though the timeframe can vary).
- The Contingent Offer: The buyer makes an offer contingent on selling their existing home. The seller accepts, but insists on the right to continue marketing the property.
- The Bump Notice: If the seller receives a second, more attractive offer (typically one without a home-sale contingency), they notify the original (bumpable) buyer.
- The Decision Window: The bumpable buyer is given a specific window of time, usually 24 to 72 hours, to make a decision.
- Remove the Contingency: To keep the house, the buyer must remove the home-sale contingency. This usually means they must prove they can purchase the new home without selling their old one (e.g., through bridge financing or sufficient cash reserves).
- Step Aside: If the buyer cannot or chooses not to remove the contingency, the contract is terminated. The seller is then free to proceed with the second, non-contingent buyer.
Implications for Market Participants
Navigating a transaction involving a bumpable buyer requires careful strategy and clear communication.
- For Sellers: This arrangement maximizes options. It secures a potential buyer while leaving the door open for a better, faster deal. However, it adds complexity and potential delays to the closing process.
For Buyers: Being a bumpable buyer carries inherent stress. There is a constant risk of losing the home to a more qualified bidder. It requires staying financially agile and potentially having a backup plan if the contingency must be waived unexpectedly.
