Contingent: What It Means In Real Estate
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Buying and selling a home often requires a dictionary as you navigate a new litany of terms, each describing a crucial step in the process. In real estate, a contingent offer has a meaning all its own—one that can make or break a deal. HomeLight-recommended real estate agents are top-tier negotiators who understand the market data that helps you save as much as possible when buying your dream home. Buyers often want a home inspection to protect their interest — they want to lift the hood of the car so to speak before they commit to buying. Buyers can also use the home inspection report as leverage to negotiate a better deal, asking you to complete repairs or offer repair credits. If you refuse and you can’t come to an agreement, they’re free to walk away.
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If a third-party appraiser says the home is worth $300,000, most lenders aren’t going to allow a $400,000 loan for that home. If there’s too much disparity between the appraised home value and the purchase price, buyer and seller can walk away penalty-free. A status of sale pending follows the active contingent status during the home buying process. This status usually indicates that the contingencies have been met, and the transaction is moving forward toward closing.
Mortgage Contingency
You might see this on foreclosed properties since banks and lenders are the ones handling the direct sale of the property. We analyze millions of home sales to find real estate agents that sell homes faster and for more money. It takes just two minutes to match you with your personalized recommendations. Usually, you’re required to provide the buyer with 24, 48, or 72 hours notice to give them a final opportunity to remove their contingency and close. If the current buyer is unable to lift their contingency in time, you can terminate the agreement, return their earnest money, and start negotiations with the next buyer.
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Choose from business checking, business credit cards, merchant services or visit our business resource center. These offers are a good way for sellers to maintain interest in their homes while a deal is sorted out. Most contingent offers involve finding financing for the home, but there are other reasons.
Types of contingent statuses
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If a home buyer loses their job or gets hit with a mountain of medical bills, they may no longer qualify for the home loan they need. View today’s mortgage rates or calculate what you can afford with our mortgage calculator. Scrambling to find an available home inspector so late in the process can add unnecessary stress,” says broker Andrea Saturno-Sanjana of Coldwell Banker Warburg. Rocket Homes Real Estate LLC is committed to ensuring digital accessibility for individuals with disabilities. We are continuously working to improve the accessibility of our web experience for everyone, and we welcome feedback and accommodation requests. If you wish to report an issue or seek an accommodation, please contact us at
Lenders require an appraisal to confirm the value of your would-be home so they don’t lend you more than the property is worth. With this contingency, if the appraisal comes in lower than the purchase price, you can renegotiate or walk away from the contract. Now that you understand common contingencies, you’ll be better prepared when you come across an active listing that you want to make an offer on while house shopping.
In this post, we’ll review how you can still throw your hat in the ring for a house that’s caught your eye, even if it’s currently under a contingent status. We’ll also look at how to decide if it’s worth your time to make the offer, and what you can expect if you do. On the other hand, sellers may accept a contingency with a no-kick-out provision in a buyer’s market, which would prevent them from accepting new offers while the contingencies are worked through.
Most home buyers finance their property purchase, and mortgage approval isn’t finalized until a few days before closing day. This mortgage contingency is a safety net in case a lender doesn’t approve the final mortgage, at which point the buyer can back out of the deal without major penalties. Appraisal contingencies mean a bank or financial institution has to agree on the value of a home.
Contingency with a kick-out clause
Do your research ahead of time and talk to your real estate agent to get a sense of the information and materials needed for making an offer on a home with an active contingent status. “Sellers are typically forced to accept some level of contingencies,” Kenin says. “It is rare to find a buyer who will blindly take on a home and who has cash to cover the entire purchase price.”Just because a home has a contingent offer in place doesn’t mean it’s off the market.
It might last for a few days to a few weeks or even longer, depending on how quickly the buyer and seller can fulfill the conditions outlined in the contract. In general, contingent means “depending on certain circumstances.” In the world of real estate transactions, it means the sale depends on the contract’s contingencies being met. A contingent listing is one where the seller has accepted an offer, but is opting to keep the listing active while they make sure all conditions are properly met. A contingent house listing means that an offer on a new home has been made, the seller has accepted it and the home is now under contract. These contingencies are clauses in the sales contract, which can include matters that deal with a home appraisal, home inspection or mortgage approval.
For buyers considering making an offer on a contingent home, it’s about balancing the desire for a particular property with the practical considerations of the home-buying process. This is where a top-rated real estate agent can provide personalized advice and strategies tailored to your specific situation. Returning to our example above, let’s say that we make the offer contingent on the home inspection showing a roof life of 15 remaining years. If the inspector deems the roof only has 7 years left, that’s unacceptable and an active contingency status will be placed on the home. The home seller might then decide to fix the roof or adjust the price, or the potential buyers might decide to exit the contract, which they can do without penalty since they had the contingency in place.
According to data from the January 2022 REALTORS® Confidence Index Survey, 23% of all purchase contracts are delayed, and 7% are terminated entirely. Those figures include both pending and contingent listings, though most issues that delay or end a contract are thanks to contingencies. A property listed as “contingent” in real estate means the seller has accepted an offer, but the deal isn’t fully closed yet. The final sale hangs in the balance, waiting for certain conditions or “contingencies” to be met.
If red flags come up during a third-party inspection, the buyers can walk away from the sale without losing earnest money. A home sale contingency is the highest risk and least common contingency on this list. It states that a buyer isn’t required to purchase from the seller if the buyer fails to sell their current home. A seller isn’t likely to accept this contingency because their home sale depends on the sale of someone else’s home. Many contingencies arise in the form of “contingency clauses” stipulated in the offer or sales contract. These can be designed to protect certain interests of the buyer or seller and may be waived by the respective party should they choose.
If a contingency isn’t met by 30 to 90 days, the home may become available. It’s still on the market until closing, but the buyer and seller have agreed not to show it. The average length of a home sale contingency offer is 30 to 90 days.
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