In real estate, the term “contingent” is used to describe a specific type of offer or sale status. Understanding what “contingent” means can help buyers and sellers navigate the complex process of buying and selling a home. In this article, we’ll explore the definition of “contingent,” provide examples, and explain the differences between contingent, non-contingent, and pending.
In Real Estate What Does Contingent Mean?
It is a proposal to buy a home that includes conditions or contingencies that must be met before the sale can be finalized. These contingencies can include things like financing, appraisal, inspection, and sale of the buyer’s current home. If the contingencies are not met, the buyer can back out of the deal and their earnest money is refunded.
What Does Contingent Mean On A House?
When a house is listed as “contingent” on a real estate website or agent’s listing, it means that the seller has accepted an offer with contingencies. The sale is not yet final, and the buyer still needs to meet the conditions of the contingencies.
Example
A common example is a home inspection contingency. If the buyer’s inspection reveals significant problems with the property, they can negotiate with the seller to fix the issues or cancel the contract.
What Is The Difference Between Contingent And Non-Contingent?
A non-contingent offer is a proposal to buy a home without any conditions or contingencies. This type of offer is more attractive to sellers because it means the buyer is willing to take on the risk of any potential issues with the property.
What Happens If The Buyer Does Not Remove Contingencies?
If the buyer fails to remove contingencies by the specified deadline, the seller can cancel the contract and keep the earnest money.
Contingent Offer Meaning
Buyers propose to buy a home, specifying conditions that the seller must meet before they finalize the sale. These contingencies can include things like:
- Financing contingency: The buyer must secure a mortgage or other financing to purchase the property.
- Appraisal contingency: The property must appraise for the sale price or higher.
- Inspection contingency: The buyer must complete a satisfactory home inspection.
- Sale of current home contingency: The buyer must sell their current home before purchasing the new property.
- Repairs or credits contingency: The seller must agree to make repairs or provide credits for certain issues with the property.
- If any of these contingencies are not met, the buyer can:
- Cancel the contract: Walk away from the deal and have their earnest money refunded.
- Renegotiate the terms: Try to negotiate a new price or terms with the seller.
- Waive the contingency: Choose to proceed with the purchase despite the issue.
Buyers use it’s offers to protect their interests and safeguard against purchasing a property that fails to meet their requirements or has unforeseen problems. Sellers, on the other hand, may prefer non-contingent offers, which carry less risk and uncertainty.
Example
Suppose a buyer makes an offer on a house that includes a contingency for financing. If the buyer is unable to secure a mortgage, they can cancel the contract and get their earnest money back.
How Often Do Contingent Offers Fall Through?
The National Association of Realtors reports that approximately 75% of contingent offers lead to successful sales, while their data shows that 25% of these offers fail to result in sales due to unmet contingencies.
How Long Does A House Stay In Contingent Status?
The length of time varies depending on the specific contingencies and the terms of the contract. Typically, contingencies need to be removed within 30-60 days of the offer being accepted.
Contingent Vs Pending
The seller and buyer have met all contingencies, and they have finalized the sale. In contrast, a contingent sale still has conditions that need to be met before the sale is complete.
Conclusion
Understanding what “contingent” means in real estate can help buyers and sellers navigate the complex process of buying and selling a home. The seller or buyer must remove the contingencies included in the contingent offer, or they will cancel the sale, causing it to fall through. Don’t hesitate to ask your real estate agent if you have any questions about contingencies or the home buying process.
