Can You Buy a House That Is Contingent?

When a home is listed as “contingent,” it indicates that an offer has been accepted by the seller, but the transaction is not yet finalized. This status signals that specific conditions, known as contingencies, must be met before the sale can fully proceed to closing. Many potential buyers encounter a contingent listing and wonder if they still have an opportunity to purchase the property.

Understanding Contingent Status

A “contingent” status in real estate signifies that a purchase agreement is in place, but its completion depends on certain specified conditions being fulfilled within a defined timeframe. These conditions are typically designed to protect either the buyer or the seller, allowing them to withdraw from the contract without penalty if the terms are not met. If these conditions are not satisfied, the buyer generally has the right to terminate the contract and often receive their earnest money deposit back.

One common condition is the inspection contingency, which grants the buyer the right to have the home professionally inspected. Buyers typically have a period of 7 to 14 days to conduct these inspections, and if significant issues are discovered, they can request repairs, negotiate a credit, or cancel the contract.

Another frequent condition is the financing contingency, sometimes called a mortgage contingency, which allows the buyer to back out if they cannot secure a loan or if the home’s appraisal does not meet the sale price. This period often ranges from 30 to 60 days. A third type is the sale of existing home contingency, where the buyer’s purchase is dependent on successfully selling their current property within a specified timeframe, often 30 to 60 days. The presence and nature of these contingencies provide insight into the likelihood of the current deal moving forward or potentially falling through.

Making an Offer on a Contingent Home

It is generally possible for a buyer to submit an offer on a home that is already in a contingent status. Such an offer is typically referred to as a “backup offer,” and it creates a legally binding agreement that positions a second buyer to purchase the home if the initial transaction fails. When a seller accepts a backup offer, it means that if the primary contract falls through due to unfulfilled contingencies, the backup offer automatically moves into the primary position. This arrangement provides a safety net for the seller, ensuring they do not have to re-list the property and restart the marketing process if the first deal collapses.

The seller’s agent often plays a significant role in facilitating backup offers, communicating the terms to the seller and managing the process. Sellers might consider accepting backup offers, especially if there are concerns about the primary buyer’s ability to meet their contractual obligations. While a backup offer is a formal contract, it remains inactive until the primary deal is terminated, providing a clear pathway for the next buyer without disrupting the initial transaction. Buyers considering a backup offer should work closely with their real estate agent to structure terms that are attractive to the seller while still protecting their own interests.

Navigating a Backup Offer Scenario

If the primary contingent deal encounters issues, such as a failed inspection negotiation, an appraisal gap, or an inability to secure financing, the seller may terminate that contract. Once the initial agreement is formally canceled, the previously accepted backup offer can be activated. The seller notifies the backup buyer and their agent that their offer has moved into the primary position.

Upon activation, the backup offer transitions into a standard purchase agreement, initiating its own set of contingency periods. The new primary buyer proceeds with their own due diligence, including conducting inspections, securing financing, and obtaining an appraisal. Typical timelines for these steps, such as 7 to 14 days for inspections and 30 to 60 days for financing, commence from the date the backup offer becomes primary. This structured process ensures the new buyer has the same protective measures as any initial buyer, allowing them to thoroughly evaluate the property and secure necessary approvals before committing to the final purchase.