What does contingent mean?
When browsing homes for sale on a real estate app like Zillow or Redfin, you may come across property labeled contingency or contingent. What does contingent mean in real estate?
A contingent contract means the offer to buy the house includes conditions of sale. A home seller may accept, reject or counter a contingent offer. When you come across a listing labeled contingent, it means the home seller has accepted an offer from another homebuyer, and conditions must first be satisfied before the home sale can proceed to closing.
Occasionally contracts do fall through when a sale contingency is not met. And sometimes sellers do accept back-up offers. It’s possible the contract includes a kick-out clause that can bump a contingency buyer aside after 72 hours if a more appealing offer comes along.
How long is a contingency on a house?
That depends on the contingencies in the contract. Some contingencies may take a few days to satisfied while others might take a few weeks or possibly months.
How often do contingent offers fall through?
While it doesn’t happen often (around 5% of contingent contracts, according to a report from Chase Bank), some contingent contracts do fall through for one reason or another.
Why do buyers back out of buying a home?
The primary reasons a homebuyer may back out of a home purchase involve revelations about the property condition and issues around financing.
Sometimes the home appraisal comes back with a lower value than the sale price. The buyer and seller can choose to negotiate a lower price at this point. Otherwise, the appraisal may cause the buyer the back out of the deal.
In the DC, Maryland and Virginia markets, with low inventories and high buyer competition during the pandemic period, we saw dozens of homebuyers moving forward despite low appraisals because people’s moods were desperate and anxious to buy.
Other reasons a buyer may back out are the home inspection contingency or a financing contingency. If the home inspection reveals a pest problem or a fixer upper / money pit, that can cause a buyer to walk. Or if the buyer was unable to secure financing, or unable to sell their current house in time, that can cause a deal to fizzle.
Title matters can also create headaches for sellers and cause a home buyer to walk away. In fact, that’s one reason we advise homebuyers to purchase title insurance. If a lien or claim arises, your title insurance policy ensures title will be cured so you can proceed to a smooth settlement without incurring any additional legal fees.
Contingent contract vs. pending contract
While contingent means depending on certain circumstances, pending means awaiting decision or settlement. A pending contract has satisfied sales contingencies, if there were any, and is likely on its way to the real estate closing table.
Can I buy a home that is contingent?
You can make an offer. The seller’s agent may be accepting back-up contracts, or the contingent contract could contain a kick-out clause that allows the seller to bump the contingent buyer aside if a more competitive offer shows up.
To make a more appealing offer, real estate agents will tell you, the fewer contingencies in your offer, the better.