Right Of First Refusal When Selling a House

Whenever I buy a home I immediately begin thinking about the day, sometime in the future, when I will decide to sell my own home. Since I'm a real estate investor and I buy and sell homes pretty regularly, more often than not I sell them without hiring a real estate agent.

So, strange as it may seem, immediately upon purchasing a home I think about whether any of the adjoining property owners might want to buy the home from me sometime in the future. I have these thoughts when the home I just purchased was not listed on the local multiple listing service, and in all likelihood, none of the neighbors knew the property was for sale before I bought it. This situation may sound unusual, but it is actually quite uncommon, and it gives me an advantage as regards marketing to other property owners in the neighborhood when I decide to sell my own home.

Sometimes I'm interested in selling the home immediately, and sometimes I keep it as a rental house. In either case, I can use a form called Right of First Refusal to begin a conversation with a buyer who expresses an interest in the home, but is uncertain about the purchase and/or unsure of the timing.

That all sounds pretty vague, doesn't it? Then what, exactly, does the Right of First Refusal entail? Actually, there are some variations available on the theme, but basically it entails at least an approximate price and possible time frame. For example, the owner of a shopping mall might have a right of first refusal on the movie theatre property next door. There is a general agreement of a price of $1 million dollars within a certain time frame. The movie theatre property owner is not obligated to sell the property at all, but if he does, he has to offer it first to the owner of the shopping mall for $1 million dollars prior to offering it to other buyers.

It works the same way for a single family home of any price. Maybe the folks next door are aging and they would love to have their daughter and her family move in beside them. This is a very common situation these days. Or a young family may want grandma and grandpa to move in next door to help with childcare. Whatever the reasons, neighboring homeowners may be eager to talk about a Right of First Refusal when I sell my own home.


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Leo Kingston has been buying and selling homes in the Oklahoma City area for nearly 3 decades. His company, 18002sellhomes, offers house owners in the OKC area a method to sell a home quickly for cash without the need of a Realtors services.