A kick out may or may not exist. When I represent a seller, I would always recommend to ask for a kick out where the house can still be shown and the seller can negotiate another offer then he can give the buyer notice (24-72 hours) to remove that contingency or back out of the contract. If a kick out does not exist the seller has to wait for the contract to reach the closing date on the contract before the back up can become primary.
If the buyer backs out, he is out the option fee... typically 100-300, inspection fee roughly 400.
The earnest money is refunded.
Just wonder if Texas has what we call a 24/72 hour notice period (others call it kick out period, as I learned from Trulia) where the seller can give notice to buyers with contingent upon sale of their house clause? If so, you might give some advise on what's the best to do for those - I know for CA, but don't know about that for TX.
Since I used to live in TX (Plano, when I worked for EDS, to be exact), i am curious to know also.