What Does It Mean When a House Says Contingent?

When a house listing is marked as “contingent,” it indicates that a buyer has made an offer on the property, and the seller has accepted it. However, the sale is not yet final because specific conditions, known as contingencies, must be met for the transaction to proceed to closing. This status means the property is under contract, but the deal is not fully guaranteed until these conditions are satisfied.

Common Contingency Types

The inspection contingency allows the buyer to hire a professional home inspector to evaluate the property’s condition. If the inspection reveals significant issues, the buyer can negotiate with the seller for repairs, a credit, or withdraw from the contract without losing their earnest money deposit. This protection ensures the buyer is aware of any major defects before finalizing the purchase.

The appraisal contingency protects the buyer if the home’s appraised value is less than the agreed-upon purchase price. Lenders require an appraisal to ensure the property’s value supports the loan amount. Should the appraisal come in low, the buyer can renegotiate the price, pay the difference in cash, or exit the agreement.

The financing contingency makes the sale dependent on the buyer securing a mortgage loan for the property. The buyer must obtain loan approval within a specified timeframe, often 30 to 45 days. If the buyer is unable to secure financing, this contingency allows them to terminate the contract.

A sale of buyer’s home contingency allows a buyer to sell their current residence to fund a new purchase. It provides a specified period, such as 30 to 60 days, for the buyer to find a purchaser for their existing property. While offering flexibility to the buyer, this contingency can make the offer less attractive to sellers who prefer a quicker, less conditional sale.

How Contingent Status Works

Once an offer with contingencies is accepted, a specific timeline begins for all parties to fulfill their contractual obligations. This period typically ranges from 30 to 60 days. Buyers are responsible for scheduling inspections, applying for their mortgage loan, and obtaining necessary appraisals within the agreed-upon deadlines.

Sellers must facilitate access to the property for inspections and appraisals, and respond to any requests for repairs or credits. Both parties work together to ensure all conditions are addressed. Communication is maintained to track progress and identify hurdles.

The contingent period concludes with one of two outcomes. If all contingencies are met, the sale progresses closer to closing, often transitioning to a “pending” or “under contract” status. This indicates a higher likelihood of the transaction completing.

Alternatively, if one or more contingencies are not met by the specified deadlines, the outcome can change. This might lead to renegotiation of terms, such as a price adjustment or a different repair agreement. If an agreement cannot be reached, or a condition fundamentally fails, the buyer may withdraw from the contract, and the property can then return to the active market.

Implications for Buyers and Sellers

For potential buyers, a “contingent” status on a listing means the property is under an accepted offer, but it could become available again. Buyers can submit a backup offer, which would be activated if the primary contingent offer falls through. This positions a buyer to secure the property if the initial deal collapses.

A backup offer typically includes all the standard terms of a purchase agreement but is conditional upon the first contract being terminated. This means the buyer’s earnest money deposit and other obligations would only become active if the primary contract fails. It provides a way for an interested party to be next in line without being bound unless the property becomes available.

For sellers, a contingent status means the property is off the active market, but the sale is not yet finalized. They understand that the transaction is dependent on the buyer satisfying specific conditions. This period requires the seller to cooperate with the buyer’s requests, such as allowing access for inspections and appraisals.

Sellers can receive backup offers while a property is contingent, and they can entertain these as a safety net. Accepting a backup offer provides assurance that another buyer is ready to proceed. The seller remains committed to the first buyer unless contingencies are not met.