Can You Still Put an Offer on a House That Is Contingent?

It is possible to submit an offer on a house that is in contingent status. A “contingent” listing indicates that a seller has accepted an offer, but the finalization of the sale is dependent on specific conditions being met. This status means the property is not yet a closed deal, leaving an opportunity for other interested buyers to potentially step in if the initial agreement falls through.

What “Contingent” Means in Real Estate

In real estate, “contingent” signifies that an offer has been accepted, but the transaction’s completion relies on certain conditions being fulfilled. These conditions, known as contingencies, are clauses within the purchase agreement that provide a safeguard for both the buyer and seller. If these specified conditions are not met within an agreed-upon timeframe, the contract may be voided without penalty, often resulting in the buyer’s earnest money deposit being returned.

One common contingency is the financing contingency, which allows the buyer to withdraw from the contract if they cannot secure the necessary mortgage loan. Similarly, an inspection contingency grants the buyer a period, typically 7 to 10 days, to have the home professionally inspected for any issues. Should significant problems like structural damage or major system failures be discovered, the buyer can request repairs, negotiate a price reduction, or cancel the agreement.

Another frequent condition is the appraisal contingency, which ensures that the home’s appraised value aligns with the agreed-upon purchase price. Lenders often require an appraisal to confirm the property’s market value before approving a loan. If the appraisal comes in lower than the sales price, the buyer may renegotiate the price or exit the contract, as lenders typically will not finance more than the appraised value. Furthermore, a sale of existing home contingency allows a buyer to make their purchase conditional on the successful sale of their current property, often within a specified period like 30 to 60 days.

How to Offer on a Contingent Property

Submitting an offer on a contingent property requires a strategic approach, often beginning with consulting a real estate agent. An agent can assist in gathering information about the existing contingencies and the primary offer’s status, which is crucial for determining the likelihood of the current deal falling through.

The primary mechanism for offering on a contingent property is to make a backup offer. A backup offer is a legally binding contract that becomes the primary agreement if the initial deal fails to close. This means if the first buyer cannot meet their contingencies—such as securing financing, resolving inspection issues, or selling their current home—your backup offer automatically moves into the primary position. It is important to remember that a backup offer is a commitment, and you will typically be required to provide an earnest money deposit, which would be returned if the primary offer closes successfully.

Crafting a strong backup offer is essential to make it attractive to the seller. This includes demonstrating strong financial capability, such as having a mortgage pre-approval letter, which assures the seller of your ability to obtain financing. Minimizing or waiving contingencies in your backup offer, where appropriate, can also make it more appealing to a seller looking for a smoother transaction. Offering competitive pricing and flexible terms, such as a favorable closing date, can further enhance your offer’s appeal.

Buyer Considerations for Contingent Homes

Buyers considering a contingent home should anticipate a potential waiting period, as the initial contract’s contingencies must first play out. While it is difficult to predict with certainty, industry data suggests that a relatively small percentage of contingent deals, around 4% to 10%, ultimately fall through.

The probability of a contingent offer succeeding can be influenced by prevailing market conditions. In a competitive seller’s market, where inventory is limited, sellers might be less inclined to accept offers with numerous contingencies, as they often have other interested parties. Conversely, in a buyer’s market, sellers may be more open to contingent offers due to less competition.

Buyers should also consider the opportunity cost associated with pursuing a contingent property. Focusing on a contingent home might divert time and resources that could otherwise be spent exploring other available properties. However, for a highly desired home, the potential reward of securing it if the primary deal fails might outweigh this cost. While limited, a backup offer can provide some negotiation leverage if the initial deal shows signs of weakness or if the seller is motivated to ensure a quick sale.