If you’ve been seeing a lot of “subject to Home of Choice” or “HOC” lately, you might be wondering what does home of choice mean? The“Home of Choice” is a contingency for the seller – it gives them the “out” from the contract if they can’t find another house to buy. In most cases, sellers need the equity (read: cash) from the sale of their house, to buy the new one. Even if they’re taking a loss and selling it for less than they paid, they may have put down a lot of cash on it and need to get it back before they can go on to the next one.
Things to Note:
You will be expected to comply with the contract and dates for inspections, appraisal, and lender requirements, as if there is no Home of Choice in place. The seller will request a certain length of time to get a contract on their future purchase – be it 14 days, 30 days, etc. They’ll have the right to void at ANY time during this period.
Ways to Protect Yourself:
I suggest to my clients that we ask for a certain amount of money to be credited to the buyer if, and only if, the seller voids the contract because of their Home of Choice contingency. This doesn’t mean that if the home inspection returns unexpected issues or the appraisal is low and parties can’t agree to terms that they will be liable to reimburse you – you’d be out the costs of those inspections regardless, and the seller shouldn’t have to pay for them. However, it does offer you a little piece of mind that they have a vested interest in making your contract work.