What Does It Mean If a House Is Listed as Contingent?

When a house is listed as “contingent,” it means the seller has accepted an offer from a buyer. The transaction is not yet finalized, as it depends on specific, agreed-upon conditions being met. These conditions, outlined in the purchase agreement, must be fulfilled by a defined deadline before the sale can close.

Understanding Contingent Status

A contingent status in real estate indicates an accepted offer, but the transaction’s completion hinges on certain contractual conditions. Until these conditions are met or waived, the sale remains unconfirmed and could terminate. This period safeguards both parties, allowing time for due diligence and issue resolution. While a primary offer is in place, the property is not entirely removed from the market, allowing other interested parties to engage with the listing.

Common Contingency Types

Several common contingencies are included in real estate contracts, each serving to protect the buyer or seller.

Financing Contingency

A financing contingency allows the buyer to secure the necessary mortgage loan for the purchase. If the buyer is unable to obtain the required financing within this timeframe, they can withdraw from the contract without forfeiting their earnest money deposit. This clause helps protect buyers from being committed to a home they cannot financially acquire.

Appraisal Contingency

An appraisal contingency ensures the property’s appraised value, determined by an appraiser, meets or exceeds the agreed-upon purchase price. Lenders require an appraisal to confirm the property’s market value aligns with the loan amount. If the appraisal is lower than the purchase price, the buyer can renegotiate, pay the difference, or terminate the contract with their earnest money returned.

Inspection Contingency

The inspection contingency grants the buyer the right to conduct home inspections within a specified period. Based on findings, the buyer can request the seller to make repairs, offer credits, or reduce the purchase price for identified defects. If negotiations are unsuccessful, the buyer can cancel the contract and retrieve their earnest money.

Home Sale Contingency

A home sale contingency makes the current home purchase dependent on the buyer selling their existing property by a certain date. This can introduce complexity, as it ties one transaction to another. Sellers might include a “kick-out clause,” allowing them to accept another offer if the first buyer cannot promptly remove their home sale contingency.

Implications for Buyers and Sellers

A contingent listing holds distinct implications for various parties involved in the real estate market.

For potential buyers, a contingent status means the home is not yet sold, and there may still be an opportunity to acquire it. While the property is under contract with a primary buyer, interested parties can submit a backup offer, which becomes active if the initial deal falls through. This allows other buyers to position themselves for a potential purchase without the home returning to the open market.

For the seller, having a property under contingent status means the sale is progressing but is not guaranteed until all conditions are satisfied. During this period, the seller is generally bound by the existing contract and cannot actively pursue or accept new primary offers. However, accepting backup offers provides a safety net, ensuring a ready buyer if the current transaction encounters issues or fails to meet its contingencies. The seller’s financial planning remains uncertain until the contingencies are removed.

What to Do When Interested in a Contingent Home

If a home you are interested in is contingent, contact your real estate agent. Your agent can inquire about the specific contingencies (financing, appraisal, inspection, or home sale). Understanding these conditions provides insight into the likelihood of the current deal closing or falling through.

Discuss submitting a backup offer with your agent. A backup offer positions you as the next buyer if the primary contract terminates, and it is legally binding once accepted. While waiting for a contingent property, continue your home search to avoid missing other suitable opportunities.