What Does It Mean When It Says Contingent on a House for Sale?

A home listed as “contingent” indicates a seller has accepted an offer, but the sale is not yet final. Specific contingencies must be met for the transaction to proceed. Outlined in the purchase agreement, these protect the buyer or seller. If not satisfied, the contract can be voided, returning the home to market.

Common Contingency Types

Real estate transactions include several types of contingencies. An inspection contingency grants the buyer the right to have the home professionally inspected for structural issues or defects. 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 will not finance more than the appraised value. It allows the buyer to renegotiate the price, make up the difference in cash, or terminate the deal if the appraisal is low.

The financing, or loan, contingency makes the sale dependent on buyer mortgage approval. This protects the buyer from being obligated to purchase if they cannot obtain a loan. If the buyer cannot secure financing within the agreed timeframe, they can exit the contract without penalty.

A sale of existing home contingency allows a buyer to sell their current property before a new purchase. This contingency provides the buyer time to sell their existing home. Sellers may include a “kick-out clause,” allowing them to continue marketing the home and accept another offer. The initial buyer then has a short period (e.g., 24 to 72 hours) to either remove their contingency or terminate the contract.

Other, less common, contingencies can be included. These may involve a title review contingency, ensuring a clear title, or the buyer’s attorney review of contract terms. HOA document review is another example, allowing buyers to understand community rules and finances.

Implications for Buyers and Sellers

For buyers, contingencies provide a safety net, allowing them to conduct due diligence and withdraw from the contract without financial penalty if specific conditions are not met. This protection allows buyers to recover their earnest money deposit if a contingency fails, such as a failed inspection or loan.

Despite an accepted offer, the contingent status means the home’s sale is not guaranteed, creating uncertainty for buyers. They remain in a period of evaluation where the transaction could still be terminated. This waiting period requires patience as assessments and approvals complete.

For sellers, a contingent status means an accepted offer, but the sale is not guaranteed until contingencies are removed. The property remains “on the market,” which can deter other potential buyers. However, sellers may still accept backup offers, especially if the contingency includes a kick-out clause.

The status “contingent” differs from “active” and “pending” listings. An “active” listing means the home is available for sale and actively seeking offers. A “pending” status, in contrast, typically means all contingencies have been met or waived, and the sale is moving forward towards closing with a high likelihood of completion. “Contingent” is an intermediate stage: an offer is accepted, but conditions must be satisfied before progressing to pending or closed.

Resolution and Status Changes

Resolving contingencies leads to changes in the property’s status. When conditions are satisfied (e.g., successful home inspection, appraisal meeting purchase price, buyer loan approval), the contingency is “removed” or “waived” by the buyer. This signals the condition is met, and the contract moves forward.

If a contingency is not met, it can lead to renegotiation or termination. For example, if an inspection reveals issues the seller won’t address, or if a loan application is denied, the buyer may terminate. In such cases, the buyer typically receives their earnest money deposit back.

Once all contingencies are removed or waived, the property transitions from “contingent” to “pending.” This “pending” status indicates the sale is moving toward final closing, with all conditions satisfied. The transaction then awaits the closing date.

The final status, “closed” or “sold,” signifies ownership transfer from seller to buyer. This occurs after all financial transactions are complete, legal documents are signed, and the deed is recorded. The journey from offer to closed sale involves navigating these contingent periods, which are designed to protect both parties.