How Long Is a House in Contingent Status?
Understand how long a house typically stays in contingent status during a real estate transaction and what factors affect this timeline.
When a house is listed with a “contingent” status, an offer has been accepted, but the sale is not yet final. This status signifies that specific conditions, agreed upon by both the buyer and seller, must be satisfied before the transaction can be completed. This period acts as a safeguard, allowing for necessary checks and approvals before the contract becomes fully binding.
Understanding Contingent Status
A contingent status means the real estate transaction is conditional upon certain requirements being met within a specified timeframe. These conditions, known as contingencies, are outlined in the purchase agreement to protect both the buyer and the seller. If these conditions are not fulfilled, the contract may be terminated without penalty, often with the buyer retaining their earnest money deposit.
Common types of contingencies include:
Financing contingency: Allows the buyer time to secure a mortgage loan.
Inspection contingency: Grants the buyer the right to have the home inspected and negotiate repairs or withdraw if significant problems are found.
Appraisal contingency: Ensures the property’s appraised value meets or exceeds the agreed-upon sales price.
Sale of existing home contingency: Permits a buyer to finalize their purchase only if their current home sells within a set period.
Typical Contingency Timeframes
The duration of contingent status varies depending on the specific conditions stipulated in the contract, but common ranges exist for many contingencies. An inspection contingency, which allows buyers to examine the property for defects, spans about 7 to 14 days after the offer is accepted. This period provides time to schedule the inspection, review the report, and address any findings.
Appraisal contingencies require the appraisal to be completed within 2 to 4 weeks after the contract is signed. The appraiser evaluates the property’s market value, often by comparing it to similar homes sold recently in the area. Financing contingencies, which allow time for loan approval, commonly range from 30 to 45 days.
A sale of existing home contingency is often the most variable in duration, sometimes extending for 30 to 90 days or even longer. This is because it depends on the buyer successfully selling their current property. Contracts with this contingency may include a “kick-out clause,” allowing the seller to accept another offer if the buyer’s home does not sell within a specific timeframe. These timeframes are negotiable and can be adjusted based on market conditions or individual circumstances.
Factors Influencing Contingency Duration
Several factors can significantly influence how long a house remains in contingent status. The specific terms negotiated in the purchase agreement between the buyer and seller directly dictate the length of each contingency period. For example, in a competitive market, buyers might agree to shorter inspection or financing periods to make their offer more attractive. Conversely, in a slower market, longer contingency periods may be more common.
The efficiency of the buyer’s lender plays a substantial role in the financing contingency duration. Delays in loan processing, such as issues with documentation or underwriting, can extend this period beyond initial expectations. The complexity of issues discovered during a home inspection can also prolong the process; if significant problems are found, negotiations for repairs or price adjustments may take additional time.
The responsiveness of both the buyer and seller to requests for information, repairs, or renegotiations impacts the timeline. Delays in communication or decision-making can extend contingency periods, potentially pushing back the closing date. Market conditions also play a part, as a fast-paced seller’s market might see buyers waiving or shortening contingencies to gain an edge, while a buyer’s market may allow for more extensive due diligence.
Resolving Contingencies
When the contingency period concludes, the real estate transaction progresses based on whether the conditions have been met. If all contingencies are satisfied, the contract becomes firm, and the sale moves closer to closing.
If a contingency is not met, various outcomes are possible. The buyer may have the right to terminate the contract without penalty and typically receive their earnest money deposit back. Alternatively, the buyer and seller might renegotiate the terms of the sale, such as adjusting the price or agreeing to specific repairs, to overcome the unmet condition. In some instances, a buyer might choose to waive a contingency, proceeding with the purchase despite the condition not being fully satisfied, though this carries increased risk.