When a House Says Contingent What Does That Mean?

When a home is listed as “contingent,” it indicates a seller has accepted an offer, but the sale is not yet finalized. This status means the transaction depends on specific conditions being met before closing. The deal remains conditional, and its completion hinges on these predetermined requirements.

Understanding “Contingent” Status

The term “contingent” in real estate means an accepted offer is in place, but the contract includes clauses requiring certain events or actions to occur within a specified timeframe. If these conditions are not fulfilled, the buyer typically has the option to withdraw from the contract without penalty, often receiving their earnest money deposit back. This differs from an “active” listing, where a property is still available for offers, and a “pending” status, which usually means all contingencies have been met and the sale is moving directly toward closing.

Key Contingencies in Real Estate

Real estate contracts frequently incorporate several common contingencies designed to protect both buyers and sellers.

An inspection contingency allows the buyer to conduct a professional home inspection within a set period, typically 7 to 10 days after the offer is accepted. If the inspection uncovers significant issues, the buyer can negotiate repairs, request a price reduction, or cancel the contract and receive their earnest money back.

An appraisal contingency protects the buyer by making the sale dependent on the home appraising for at least the 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 in cash, or withdraw from the deal without losing their earnest money.

A financing (mortgage) contingency stipulates that the sale is conditional upon the buyer securing loan approval. This clause provides a timeframe, often 30 to 60 days, during which the buyer must obtain financing. If the buyer is unable to secure a mortgage within this period, they can terminate the contract and recover their earnest money deposit.

A sale of existing home contingency allows a buyer to cancel their purchase agreement if they cannot sell their current home by a specified date. This protects buyers from owning two properties simultaneously and facing two mortgage payments. Sellers may view this contingency as less appealing due to the added uncertainty and potential for delays.

The Contingency Period

During the contingent period, the buyer undertakes various due diligence activities to satisfy the agreed-upon conditions. This involves tasks like home inspection, appraisal, and submitting loan documentation. Deadlines are established for each contingency, typically ranging from a few days for inspections (e.g., 7 to 14 days) to several weeks for financing (e.g., 30 to 60 days).

As each contingency is met, it is removed or waived, moving the transaction closer to closing. Once the home inspection is completed and any agreed-upon repairs are addressed, the inspection contingency is satisfied. If a contingency is not met within the stipulated timeframe, such as financing approval not being granted, the buyer generally has the right to terminate the contract. The earnest money deposit is typically returned to the buyer, and the property may become available on the market again.

Navigating Contingent Listings

For buyers, a “contingent” listing can still present an opportunity, as the initial deal is not final. Buyers can submit a backup offer, which may be considered by the seller if the primary contingent contract falls through. A backup offer can position a buyer to be first in line if the current agreement fails. Buyers interested in a contingent property should ensure their finances are in order, such as having mortgage pre-approval, to make a backup offer more attractive.

Sellers with a contingent property are awaiting the fulfillment of conditions by the buyer. If a buyer fails to meet a contingency, the seller has options, including putting the house back on the market. Some contracts may include a “kick-out clause,” allowing the seller to accept a new, stronger offer if the current buyer cannot remove their contingency within a specified period. This provides sellers with flexibility while their property is under a contingent contract.