What Does Active Under Contract Mean vs Contingent?

When searching for properties online, prospective buyers often encounter various statuses indicating a home’s availability. “Active Under Contract” and “Contingent” are two common terms that can cause confusion. These statuses signal a seller has accepted an offer, but the transaction has not reached its final closing stage. Understanding their distinctions is important, as it influences how interested parties can proceed with an offer.

Active Under Contract Status

“Active Under Contract” signifies a seller has accepted a buyer’s offer, and the transaction is progressing, though specific conditions, known as contingencies, still need to be satisfied. Common contingencies include a satisfactory home inspection, a property appraisal, and the buyer securing final loan approval.

Properties with this status often remain listed as “Active” in the multiple listing service (MLS). This allows sellers to continue showing the home and solicit backup offers. A backup offer provides a safety net for the seller if the primary deal falls through due to a contingency not being met. This approach minimizes downtime and potential financial loss for the seller.

Contingent Status

A “Contingent” listing also indicates an accepted offer, but the sale’s progression depends on specific, often more substantial, conditions being met. These contingencies are outlined in the purchase agreement and must be satisfied within a negotiated timeframe. If these conditions are not fulfilled, the buyer usually has the right to withdraw from the contract without penalty, often retaining their earnest money deposit.

Common examples include the buyer needing to sell their current home, known as a home sale contingency, or securing specific financing terms. A home sale contingency can significantly prolong the process. While under a contingent contract, sellers often remain more proactive in marketing the property and may be more receptive to other offers, especially if the existing contingency is difficult to satisfy. Some contingent listings may include a “kick-out clause,” allowing the seller to accept a new offer if the original buyer cannot remove their contingency within a short notice period.

Key Distinctions Between Active Under Contract and Contingent

The primary difference between “Active Under Contract” and “Contingent” statuses lies in the perceived certainty of the sale closing and the seller’s openness to new offers. “Active Under Contract” generally suggests a higher probability of the transaction being completed. The contingencies associated with this status are typically standard components of a real estate transaction, such as home inspections, appraisals, and loan underwriting, which are often nearing resolution.

Conversely, a “Contingent” status often implies a more significant or less certain hurdle remains before the sale can finalize. Contingencies like a buyer’s home sale or unique financing requirements introduce greater risk and uncertainty. This difference directly impacts a seller’s willingness to entertain new offers, as “Active Under Contract” listings usually have a primary buyer firmly committed, while “Contingent” listings often indicate a greater need for backup options.

Strategic Considerations for Buyers and Sellers

For buyers, understanding these statuses helps develop an effective purchasing strategy. While a property listed as “Active Under Contract” might seem unavailable, it can be worthwhile to inquire about submitting a backup offer. This is particularly true if the property is highly desired, as deals can fall through for various reasons. When considering a “Contingent” property, buyers should consult their real estate agent to understand the specifics of the contingencies involved and assess the likelihood of them being met.

Sellers should consider the implications of listing their property as either “Active Under Contract” or “Contingent.” Opting for “Active Under Contract” generally signals a strong commitment from the initial buyer, but keeping the listing visible allows for collecting backup offers, providing financial security. If a property is listed as “Contingent” due to a more challenging condition, such as a buyer’s home sale, the seller may choose to continue actively marketing the property and openly solicit other offers, possibly with a kick-out clause. Clear communication with their agent and potential buyers about the property’s status and any existing contingencies helps manage expectations and streamline the selling process.