What Is Active With Contingency in Real Estate?

Real estate transactions involve various statuses that inform the market about a property’s availability. Among these, “active with contingency” is a common status, indicating a property is under contract but with specific conditions. Understanding this status is important for both potential buyers and sellers navigating the sales process.

Defining “Active with Contingency”

When a property is listed as “active with contingency,” the seller has accepted a buyer’s offer. However, the sale’s completion depends on certain conditions, known as contingencies, being met within a specified timeframe. The property remains “active” because the deal is not yet finalized and could still fall through if the conditions are not satisfied. In some instances, sellers may continue to show the property and consider backup offers during this contingent period. This status signifies that while a buyer is committed, their commitment is conditional.

Common Real Estate Contingencies

Real estate contracts often include several contingencies designed to protect buyers:

Inspection contingency: Allows a buyer to have the home professionally inspected within a set period. If significant issues are found, the buyer can negotiate repairs, a price reduction, or withdraw from the contract without penalty.
Financing or appraisal contingency: Ensures the buyer can secure the necessary mortgage loan. An appraisal contingency protects the buyer if the home’s appraised value is less than the agreed-upon purchase price, allowing renegotiation or cancellation. Lenders typically require an appraisal to ensure the loan amount does not exceed the property’s value.
Home sale contingency: Makes the purchase dependent on the buyer successfully selling their current property within a specified timeframe. This protects buyers from owning two homes or managing two mortgages simultaneously.
Title contingency: Allows the buyer to review the property’s title for any liens, disputes, or ownership issues. This ensures a clear title can be transferred.

Implications for Prospective Buyers

For individuals interested in purchasing a property listed as “active with contingency,” the status indicates that an offer has been accepted but the deal is not yet closed. Prospective buyers can often still view the property and submit a backup offer. While the initial offer takes precedence, a backup offer can position a new buyer to proceed if the primary deal fails to meet its contingencies.

The likelihood of a contingent deal falling through varies, but common reasons include issues with financing, appraisal, or inspection. If the original buyer cannot satisfy their contractual conditions, the property may return to the market, making backup offers relevant. Buyers should consult with their real estate agent to understand the specific contingencies in place and the potential for the deal to reopen.

Implications for Sellers

For sellers, an “active with contingency” listing means an accepted offer, but the sale is not guaranteed until all conditions are met. During this period, sellers typically cooperate with buyer requests, such as allowing home inspections or appraisals. Sellers risk the deal falling through if contingencies are not satisfied, which would require them to re-list the property.

Some sellers include a “kick-out clause” in the contract, allowing them to continue marketing the property and accept a stronger backup offer. If a new offer comes in, the original buyer is given a short timeframe, often 24 to 48 hours, to remove their contingencies or lose the property to the new offer. This strategy can provide sellers with a quicker, more certain sale.