In real estate, “contingent” means that a seller and buyer have agreed to terms on a property, but the final sale depends on certain conditions being met. We generally think of contingencies as buyer-related — a sale dependent on the buyer selling their current property or on the buyer getting final approval for financing. But there can also be contingencies based on the seller. One example is that the sale remains on hold until inspections are complete.
Defining the term is easy enough, but that doesn't fully answer the question "What does contingent mean in reality?" In this article, we'll get into the unique role of contingency in a real estate transaction.
In real estate, “contingent” and “pending” are similar terms referring to the status of a “for sale” property. Both mean that someone made an offer on a home, but there is a slight difference.·
A property can also be pending with contingencies. That means that the sale is in process, but there are still some conditions that need to be met. In summary, a property that is “contingent” means that a buyer made an offer based on certain conditions. A property that is “pending” means that the seller accepted an offer, and the sale is in process.
It's hard to list every reason a pending or contingent home sale may fall through. Some reasons include:
By being aware of these potential challenges, you can be better prepared to handle them if they arise.
A contingent property is technically still active on the market. The sale is not final until all conditions have been satisfied. Whether the seller can accept an offer while holding one with conditions depends on the agreement between the seller and the buyer.
In general, most contingency offers come with an expiration date and the seller may only consider other offers after that date. In fact, the seller may be legally obligated to continue working with the original buyer until all conditions are resolved or the offer expires. Or there is a mutual agreement between the buyer and the seller to cancel the offer. In some cases, a seller may accept another offer. If this happens, the seller would need to inform the original buyer that they are no longer considering their offer.
Basically, it all depends on the details. If you are involved in a contingent offer, take care to review the terms of the offer before agreeing.
If you put in an offer on a contingent home that fell through, there are a few potential outcomes. Some depend on the seller, some depend on what you want:
The outcome will depend on the specific circumstances of the contract and the reason the sale fell through. It’s best to communicate with the real estate agent or the seller to get more information about the situation.
Whether it is worth looking at a contingent house depends on your personal circumstances and priorities. Here are a few things to consider:
If you are not in a rush to buy a house and you are comfortable with the contingencies and the process of handling them, it can be worth looking at a house that is contingent. Additionally, if the house is a perfect fit for your needs, and the price is right, it may be worth pursuing.
Ultimately, it is a decision that depends on your personal circumstances and priorities. It is also important to consult with a real estate agent or attorney to understand the terms and legal aspects of the offer.
A contingent home is still active. The exact terms of the offer determine whether a seller may entertain other offers. So, if you find a home that you love, it may still be worth looking into as there are plenty of reasons that the sale may not be complete.
If you are on the other side and need to submit an offer with contingency, you should talk to your REALTOR®. They’ll help you navigate the space and keep you competitive in a competitive market.