Is Under Contract the Same as Contingent?

Many individuals navigating the housing market often encounter real estate terms that can seem interchangeable. “Under contract” and “contingent” are frequently misunderstood. Understanding their precise definitions is important for both buyers and sellers, as they represent different stages and conditions within a property transaction. This article aims to clarify these terms.

The “Under Contract” Status

A property designated as “under contract” signifies that a seller has accepted an offer from a buyer, and both parties have signed a purchase agreement. This signed agreement creates a legally binding commitment to complete the transaction, moving the property off the active market. While the property is under contract, it is not yet sold, and the transaction is progressing through various stages before the final closing. These stages typically include property inspections, appraisals, and the buyer securing financing.

During this period, the seller generally stops actively marketing the property or soliciting new offers from other potential buyers. The duration a property remains under contract can vary, often ranging from 30 to 60 days, depending on the complexity of the sale and the time required for financing and other due diligence. This status indicates a serious commitment from both sides, with the expectation that the sale will proceed to completion.

The “Contingent” Status

The “contingent” status is a specific classification within the broader “under contract” category, meaning the sale is dependent upon certain conditions being met. These conditions, known as contingencies, are specified within the purchase agreement and must be satisfied for the transaction to proceed to closing. If a contingency is not met, the buyer typically has the right to terminate the contract without penalty, and the property may then return to the market.

Common types of contingencies include a financing contingency, which allows the buyer to withdraw if they cannot secure a mortgage loan within a specified timeframe. An inspection contingency grants the buyer the right to have the property professionally inspected and, based on the findings, negotiate repairs or terminate the agreement. An appraisal contingency protects the buyer if the property’s appraised value is less than the agreed-upon purchase price, which can impact loan approval. Finally, a home sale contingency allows the buyer to terminate the contract if they are unable to sell their current home by a certain date.

Comparing These Property Statuses

While all “contingent” properties are “under contract,” the term “under contract” is a more encompassing designation. A property can be “under contract” with all contingencies already satisfied or removed, meaning the sale is proceeding directly towards closing with fewer remaining conditions. Conversely, a “contingent” status highlights that conditions still need to be fulfilled, introducing a higher degree of uncertainty regarding the transaction’s completion. The presence of active contingencies means the deal could still fall through if conditions are not met.

A property listed as “contingent” suggests the current deal has specific hurdles to clear, which might allow for a backup offer. Sellers of contingent properties may still entertain backup offers in case the primary deal fails to close. However, for a property that is simply “under contract” with no active contingencies, the likelihood of the deal falling apart is considerably lower, making it less probable for a new offer to be considered.