What Does It Mean When a Property Is Contingent?

When searching for a new home, you might encounter various statuses for properties listed on the market. One such status, “contingent,” is important for anyone navigating the property market. This status indicates a specific stage in the home sale process, distinct from fully available properties.

Defining Contingent Property

A “contingent” status means a seller has accepted an offer, but the sale is not yet complete. The transaction depends on certain conditions, known as contingencies, being met. Unlike an “active” listing, a contingent property is technically off the market because a primary offer has been secured.

The contingent phase is a period where both parties work to satisfy agreed-upon conditions before closing. This differs from a “pending” status, where all contingencies have been met or waived, and the transaction awaits the final closing date. If contingencies are not fulfilled, the deal can fall through, and the property may return to an active status.

Key Contingency Types

Several common types of contingencies protect buyers and sellers:

Inspection Contingency: This allows the buyer to hire a professional home inspector to evaluate the property’s condition. Based on findings, the buyer can request repairs, negotiate a price reduction, or withdraw their offer if significant issues are discovered.
Appraisal Contingency: This condition protects the buyer by making the sale dependent on the property appraising for at least the agreed-upon purchase price. If the appraisal comes in lower, the buyer may renegotiate the price, pay the difference, or terminate the contract. Lenders require an appraisal to ensure the loan amount does not exceed the property’s value.
Financing Contingency: This gives the buyer a specified period to secure a mortgage loan. This clause protects the buyer if they are unable to obtain the necessary financing, allowing them to cancel the contract and receive their earnest money deposit back.
Sale of Current Home Contingency: This allows a buyer to make their purchase offer conditional on the successful sale of their existing property. This provision offers financial protection, preventing the buyer from being obligated to purchase a new home before their current one is sold.

Impact on Buyers and Sellers

For buyers, a contingent property means an offer has been accepted, but the sale isn’t final. Buyers can submit a “backup offer,” which becomes the primary offer if the initial deal falls through. If a buyer’s offer makes a property contingent, they are responsible for satisfying their agreed-upon contingencies within specified timelines.

For sellers, a contingent status means their property is under contract, requiring cooperation with the buyer to fulfill conditions. Some contracts include a “kick-out clause,” allowing the seller to market the property and accept a new offer. If a new offer is received, the original buyer is given a short period to remove their contingencies or forfeit the contract.

Managing a Contingent Transaction

Once a property enters contingent status, steps unfold to move the transaction toward closing. The timeline for meeting contingencies varies, ranging from a few days for inspections to several weeks for financing and appraisal.

Effective communication between the buyer, seller, their real estate agents, and the lender is important during this phase. Agents facilitate inspections, appraisals, and negotiations. The lender processes the buyer’s loan application, verifying financial information and ordering the appraisal.

If all contingencies are met or waived, the transaction progresses to a “pending” status, on track for closing. If a contingency cannot be satisfied—such as a loan denial or insurmountable inspection issues—the contract may be terminated. The property then reverts to an active listing, allowing the seller to seek new offers.