What Does It Mean If a House for Sale Is Contingent?

When a house for sale is listed as “contingent,” it indicates that an offer has been formally accepted by the seller. However, the transaction is not yet finalized because specific conditions, known as contingencies, must be satisfied before the sale can be completed.

Understanding Contingent Status

A “contingent” listing means a property is under contract, but the sale relies on certain conditions being met. This status differs from “active,” where a property is available for offers, or “sold,” which signifies a completed transaction.

Unlike a “pending” status, where most or all contingencies have been removed and the sale is moving closer to closing, “contingent” implies there are still significant hurdles to clear. For instance, some properties might be listed as “under contract – no show,” meaning the seller is not accepting further showings while waiting for contingencies to clear.

Common Types of Contingencies

One frequent condition in real estate contracts is the inspection contingency, which grants the buyer a specified period to conduct a thorough home inspection. If the inspection reveals significant issues, the buyer can typically negotiate repairs with the seller, request a price reduction, or, if an agreement cannot be reached, withdraw from the contract without penalty.

The appraisal contingency ensures the property’s value, as determined by a professional appraiser, meets or exceeds the agreed-upon purchase price. Lenders require an appraisal to ensure the loan amount is justified by the property’s market value. If the appraisal comes in lower than the sales price, the buyer may renegotiate the price, pay the difference out-of-pocket, or terminate the contract.

The financing, or mortgage, contingency makes the sale dependent on the buyer securing the necessary loan to purchase the home. This condition provides a specified timeframe for the buyer to obtain loan approval. Should the buyer be unable to secure financing within this period, they can cancel the purchase agreement without losing their earnest money deposit.

A less common condition is the sale of buyer’s home contingency, where the buyer’s ability to purchase is contingent upon the sale of their current residence. This type of contingency can make an offer less appealing to sellers, as it introduces an additional layer of uncertainty and a potentially longer timeline for closing. Sellers accepting such offers may include a “kick-out clause,” allowing them to accept a stronger, non-contingent offer if one arises, giving the initial buyer a short window to remove their contingency.

What Contingent Means for Buyers and Sellers

For potential buyers still searching for a home, a contingent listing means the property is not definitively off the market, even though an offer has been accepted. The transaction’s completion hinges on the existing buyer fulfilling their contractual obligations, and if those conditions are not met, the deal could fall through. This possibility means that other interested buyers might still have an opportunity to purchase the home.

Some sellers may choose to accept backup offers on a contingent property, providing a secondary agreement that would become active if the primary contingent deal fails. This strategy offers sellers an alternative if the initial contract is terminated. Understanding the nuances of a contingent status allows other buyers to gauge their potential for acquiring the property.

For sellers, a contingent status requires patience, as they must wait for the buyer to satisfy all agreed-upon conditions. The timeframe for contingencies to be met can vary widely but commonly ranges from 30 to 60 days, depending on the number and complexity of the conditions. During this period, the seller faces the risk that the deal may not close if the buyer cannot meet the contingencies, or if issues arise during the inspection or appraisal process that cannot be resolved.