When you’re diving into the housing market, scrolling through endless listings is par for the course. Along the way, you might spot homes tagged as contingent. Does that equate to “off the market” or is there still hope? Let’s unravel what contingent listings truly signify and whether these properties deserve a spot on your radar.
Contingent: What’s Behind the Term?
Essentially, contingent boils down to “subject to conditions.” In real estate jargon, it indicates that the sale is tied to specific contractual stipulations being fulfilled. A contingent status means the seller has greenlit an offer but keeps the listing live, ensuring all agreed-upon hoops are jumped through before closing the deal.
When both parties – buyer and seller – tick off the necessary boxes laid out in the agreement, the transaction moves forward smoothly. But if hitches arise, either side typically reserves the option to withdraw, safeguarding against unforeseen twists. Below, we spotlight some of the most frequent contingencies you’ll encounter:
Appraisal Contingency
This clause steps in if the home’s appraised value falls short of the offer price or if there are legal claims (liens) hanging over the property that could complicate ownership after the sale.
Inspection Contingency
Buyers often insist on a thorough professional home inspection before committing. This contingency flags hidden issues and repair costs upfront. Sometimes, buyers set a cap on repair expenses—for instance, they might require the ability to bow out if fixes top $10,000. In fiercely competitive markets, buyers may also attach a contingency requiring the sale of their own property first, ensuring this purchase only proceeds if their previous home sells by a specific deadline.
Contingency Related to New Housing
It’s not just buyers with conditions. Sellers, needing a place to move to, can accept an offer but attach a clause letting them withdraw if they don’t find a new home within a set timeframe.
Quick fact: According to the National Association of Realtors, approximately 5% of real estate contracts collapse before closing—underscoring the role contingencies play in protecting all parties involved.
Illustrative Example: Contingency in Action
Imagine a buyer proposes $400,000 for a house, with an $80,000 down payment. Their offer includes an appraisal contingency requiring the home to value at or above $400,000, alongside an inspection contingency capping repairs at $15,000. The seller signs off on the deal.
If the appraisal meets or surpasses the $400,000 mark and the inspection reveals no major red flags, the deal rolls onward. Conversely, should the appraisal come in below target or repairs exceed that $15,000 threshold, the buyer can either withdraw or renegotiate the terms.
The Spectrum of Contingent Statuses You Might Encounter
- Contingent: Continue to Show
Seller has accepted an offer with conditions but keeps the door open to other prospects in case the current deal unravels. - Contingent: No Show
The accepted offer is strong, with minimal or manageable contingencies, so the seller halts further showings. - Contingent: With Kick-Out Clause
The seller may pull out if conditions aren’t met by an agreed deadline. - Contingent: Without Kick-Out
No strict deadline is set for contingencies, potentially stretching the timeline as the buyer takes their time to satisfy conditions. - Short Sale Contingent
Here, the seller agrees to sell below what they owe the lender—a complex scenario often demanding backup offers due to lender and probate challenges.
Contingent vs. Pending: Spotting the Nuance
While contingent and pending might seem like twins, subtle distinctions matter. An offer with hanging conditions sits in the contingent phase. Once those are cleared, it graduates to pending status—a signal the deal is inching closer to the finish line. Usually, pending listings are further along and less likely to fall apart, so they’re often less enticing for buyers seeking opportunities.
How Long to Shift from Contingent to Pending?
The timeline oscillates wildly depending on deal complexity. Fewer hoops mean quicker transitions. Conversely, deals without a kick-out clause might linger as there’s no ticking clock pushing the buyer to wrap things up.
Frequently Asked Questions
Is It Worth Checking Out a Contingent Listing?
Often, yes. Most accepted offers convert into sales, but surprises happen. Active showings suggest the seller expects the current deal might fall through, so keeping an eye on these listings can pay off.
Can I Submit an Offer on a Contingent Property?
Absolutely. Depending on contingencies, sellers may ditch the accepted bid to take yours. At minimum, it positions you upfront if the original deal collapses.
How Do You Outbid a Contingent Offer?
No guarantees there, but trimming your contingencies generally makes your proposal more attractive.
How Frequently Do Contingent Deals Fail?
Not too often. The National Association of Realtors notes around 5% of transactions fall apart pre-closing.
Can Sellers Pull Out of a Contingent Offer?
Yes, especially if contingencies remain unmet. They might also withdraw for other reasons, but financial penalties could follow if it’s without valid cause.
If you’re eyeing contingent listings, team up closely with your Realtor. Dissect the contingencies to gauge whether tossing your hat in the ring is worthwhile. Despite the uphill odds, sales do occasionally unravel, offering a golden chance to snag your dream home.
