What Does It Mean When a Listing Says Contingent?

Real estate listing statuses provide essential information about a property’s availability. The “contingent” status frequently creates confusion. This article clarifies its meaning, helping prospective buyers understand what it signifies.

Understanding Contingent Status

When a real estate listing is “contingent,” a seller has accepted an offer, but the sale is not yet final. Specific conditions, known as contingencies, must be met before closing. These conditions are outlined in the purchase agreement and protect the buyer, seller, or both parties. Until all contingencies are satisfied or waived, the deal remains conditional. The property often remains visible on the market with its “contingent” tag.

Common Contingencies

Several types of contingencies appear in real estate contracts, each designed to address specific aspects of the transaction and provide protection.

An inspection contingency allows the buyer to conduct professional home inspections within a specified timeframe. If the inspection uncovers significant issues, the buyer can negotiate with the seller for repairs, a price reduction, or withdraw from the contract without losing their earnest money deposit.

An 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. If the appraisal comes in low, the buyer can renegotiate the price, pay the difference, or terminate the contract and receive their earnest money back.

A financing contingency makes the sale dependent on the buyer securing a mortgage loan within a set period. This clause protects the buyer from being obligated to purchase the home if they cannot obtain financing, allowing them to withdraw from the deal and retain their earnest money. This contingency ensures final loan approval is secured.

The sale of buyer’s home contingency means the buyer’s offer is dependent on the successful sale of their current residence by a specified date. This can protect buyers who need the proceeds from their existing home to finance the new purchase. If the buyer’s home does not sell within the agreed timeframe, they can terminate the contract without penalty. Other contingencies include title contingencies, which ensure the property has a clear title, and attorney review contingencies, allowing legal counsel to review and approve the contract terms.

Implications for Interested Buyers

For other potential buyers, a “contingent” status means the property is not entirely off the market. The deal could fall through if the specified contingencies are not met, presenting an opportunity to consider submitting a backup offer.

A backup offer is a legally binding contract that would become the primary offer if the initial contingent deal fails to close. Sellers may accept backup offers, especially in competitive markets or when they are uncertain about the initial deal’s closure, providing a safety net for them. If the initial deal falls through due to a failed inspection, a low appraisal, or the buyer’s financing not being secured, the backup offer can then move into the primary position. Buyers submitting a backup offer typically still need to provide earnest money, which would be returned if the primary offer closes successfully.

Contingent Versus Other Listing Statuses

Understanding the “contingent” status is clearer when compared to other common real estate listing terms that indicate a property’s availability and transactional stage.

An “active” listing means the property is currently available for sale, has no accepted offers, and is open for showings and offers from any interested buyer. This is the initial stage where a property is actively marketed.

“Contingent” signifies an accepted offer, but with conditions still to be fulfilled. The property often remains visible and may still be shown for backup offers. If all contingencies are successfully met, the listing status typically transitions to “pending.”

A “pending” or “under contract” status indicates that an offer has been accepted and all contingencies have generally been met or waived. At this stage, the sale is much further along and is expected to close, with the property usually no longer being shown to other potential buyers. The sale is considered more secure than a contingent listing.

Once the transaction is complete, and ownership has officially transferred from the seller to the buyer, the property’s status becomes “sold” or “closed.” This finalizes the process, marking the property as no longer available on the market. Listings can also be “off-market,” “withdrawn,” or “expired,” meaning they are no longer actively for sale, either temporarily removed by the seller or because the listing agreement has ended without a sale.