You probably haven’t heard the term bump clause unless you are in the real estate business or have sold/purchased a property with a contingency. But you know, that’s OK! That’s why we are here.
Now if you are unsure as to what a contingency is then look back one post and read all about it. Once you know what a contingency is, the term “bump clause” makes a lot more sense. The “bump clause” is part of your contract. If you are involved in a real estate deal that has a contingency then this is a section you will want to pay close attention to. If you are the buyer, the clause will allow someone who has no contingency to essentially move you out of the way if the contingency isn’t removed in the allowed time. This can easily be viewed as a positive for the seller so they are not sitting and waiting on a deal that may or may not actually happen.
So say you own a home and need to move areas or need a bigger place. Well, you will be buying and selling. You may find the perfect home 3 days later and not have even placed your own home on the market. This means there is a chance you will be submitting and offer with a contingency and more than likely there will be a bump clause. Say the bump clause states that you will have 24 hours to remove your contingency if a non contingent offer is submitted. Well, one week later another person submits and offer to the same home but without the contingency. Your agent will notify you and then there will be a decision to make.