What Does It Mean When a House Is Contingent?

What Does It Mean When a House Is Contingent?

When a house is listed as “contingent,” it means the seller has accepted an offer from a buyer, but the sale is not yet final. This status indicates that specific conditions, known as contingencies, must be met before the transaction can proceed to closing. These conditions are typically outlined in the purchase agreement and serve as safeguards for both the buyer and seller.

Common Types of Contingencies

Several types of conditions can make a home sale contingent, each designed to protect either the buyer or the seller. A common financing contingency means the buyer’s ability to purchase the home depends on securing a mortgage loan. This protects the buyer by allowing them to withdraw from the contract without losing their earnest money deposit if they cannot obtain the necessary financing. An appraisal contingency ensures the home’s value, as determined by a professional appraisal, meets or exceeds the agreed-upon purchase price. If the appraisal comes in lower, the buyer can renegotiate the price or terminate the contract.

An inspection contingency grants the buyer the right to have the home professionally inspected for any issues. If the inspection uncovers significant problems, the buyer can typically request repairs, negotiate a lower price, or cancel the agreement. Another type is the home sale contingency, where the buyer’s purchase of the new home is dependent on the successful sale of their current property. This provides a safety net for buyers who need the proceeds from their existing home to finance the new purchase.

The Contingent Period

The contingent period is the timeframe during which the conditions specified in the purchase agreement are addressed and fulfilled. This period begins once the seller accepts the buyer’s offer. The duration can vary, typically ranging from 10 to 60 days, depending on the complexity of the contingencies involved.

During an inspection contingency, the buyer arranges for a professional home inspection, usually within 7 to 10 days of the offer acceptance. After reviewing the inspection report, the buyer may negotiate with the seller for repairs or a price reduction, or they may choose to terminate the contract if significant issues are found.

For a financing contingency, the buyer actively works with their lender, submitting all required financial documents for loan approval and underwriting. This process often takes 30 to 60 days, and if financing is not secured by the agreed-upon deadline, the buyer can typically cancel the purchase without penalty.

In the case of an appraisal contingency, an independent appraiser evaluates the property’s value. If the appraised value is less than the offer price, the buyer might renegotiate the price with the seller, cover the difference in cash, or, if the contract allows, withdraw from the deal. When a home sale contingency is in place, the buyer focuses on selling their current home, and the seller might continue to show the property and accept backup offers, sometimes including a “kick-out clause” that allows them to move forward with a new offer if the initial buyer cannot meet certain conditions.

Contingent Versus Other Home Statuses

An “active” listing means the home is currently on the market and has not yet received an accepted offer, making it fully available for potential buyers to view and make proposals. In contrast, a “contingent” status indicates that an offer has been accepted, but the sale is conditional upon certain requirements being met. While contingent, the property may still be shown to other interested buyers, and backup offers can be considered by the seller.

A “pending” status generally means that all contingencies have been satisfied or waived, and the transaction is progressing toward closing. Properties in a pending state are typically no longer available for showings or new offers, as the sale is considered much closer to finalization. Lastly, “off-market” or “sold” signifies that the transaction is complete, and the property is no longer available for purchase. A contingent listing offers a possibility for a backup offer if the initial deal falls through, unlike a pending listing where the window for new offers has closed.