What Does Contingent Mean on a House for Sale?

When a house is listed as “contingent,” it indicates a specific stage in the real estate transaction where an offer has been accepted by the seller, but the sale is not yet finalized. This status means that certain conditions, known as contingencies, must be met before the property can officially transfer ownership. These conditions are included in the purchase agreement to protect both the buyer and the seller, ensuring an “out” without penalty if unforeseen issues arise.

What Contingent Means

In real estate, “contingent” signifies that a property is under contract, but the completion of the sale hinges on specific criteria. An accepted offer is in place, yet the transaction remains conditional, awaiting the satisfaction of these agreed-upon terms. If these conditions are not met, the buyer can withdraw from the agreement, and the property can return to the market.

This status differs from an “active” listing, where a property is available for offers, and a “pending” status, which usually means all contingencies have been cleared and the sale is progressing toward closing. A contingent status signals that while a deal is in motion, there are still hurdles that need to be cleared. It acts as a protective measure, allowing buyers to avoid purchasing a property if significant problems are discovered or if their financial situation changes.

Common Contingency Conditions

Various conditions can lead to a house being listed as contingent, each designed to safeguard the interests of the parties involved.

Home Inspection Contingency

One frequent condition is the home inspection contingency, which grants the buyer a specified period, often 7 to 10 days, to have the property professionally inspected. Should the inspection uncover significant defects, the buyer can negotiate with the seller for repairs or a price reduction, or cancel the contract and recover any earnest money deposit.

Appraisal Contingency

Another common condition is the appraisal contingency. This clause ensures that the property’s appraised value meets or exceeds the agreed-upon purchase price. If the appraisal comes in lower, the buyer or their lender can renegotiate the price with the seller, cover the difference out-of-pocket, or withdraw from the agreement without penalty.

Financing Contingency

The financing, or mortgage, contingency provides the buyer a period, often 21 to 30 days, to secure the necessary loan approval. This protects the buyer from being obligated to purchase the home if they are unable to obtain a mortgage.

Home Sale Contingency

Buyers relying on the sale of their current home often include a home sale contingency. This condition allows them to back out of the new purchase if their existing property does not sell within a specified timeframe, typically 30 to 60 days.

Title Contingency

A title contingency allows the buyer to review the property’s title search results, ensuring there are no undisclosed liens, ownership disputes, or other claims that could affect clear ownership.

Navigating a Contingent Sale

When a property is under a contingent status, both buyers and sellers engage in specific actions to move the transaction forward. For the buyer, the focus is satisfying all included contingencies within agreed-upon timeframes. This involves scheduling inspections, coordinating with lenders for appraisal and loan approval, or actively marketing their current home.

For sellers, accepting a contingent offer means their property is temporarily off the active market, but they must be prepared for the deal not to close. Sellers may continue to show the property and accept backup offers, especially if the contingent offer includes a “kick-out clause.” A backup offer becomes the primary contract if the initial contingent deal falls through.

The process of satisfying contingencies involves the buyer providing documentation that each condition has been met, or formally waiving a contingency. If a contingency cannot be met, such as a low appraisal or significant inspection issues, parties can negotiate new terms, or the buyer can terminate the contract. While most contingent deals proceed to closing, approximately 7% of contracts are terminated, often due to unmet contingencies.