What does it mean if a listing is contingent?
If you’re a homebuyer searching for homes online, you may find yourself falling for homes that are labeled “Active contingent,” but do you know what contingent means?
In short, a contingent property is under contract with another buyer, but the final sale of the home is dependent (contingent) on a specific set of criteria that must be met. If the property falls short of those expectations, the buyer is able to rescind their offer.
After some of a sale’s contingencies have been removed, the home will be listed as “pending.” A pending property status means that the sale is more imminent and both the buyers and sellers are marching toward the closing table, usually subject only to a financing contingency, sign-off on the title and a final walk-through of the property.
There are many different types of contingencies, but here are some of the most common scenarios.
Contingent, subject to inspection: The buyer and seller have signed a purchase agreement (contract), but the buyer is allowed to cancel the deal if the buyer does not like the results of the home inspection. Usually these inspections take place a few days after the purchase agreement is signed.
Contingent, sale of another property: The buyer and seller have signed a purchase agreement, but the buyer is allowed to cancel if the buyer’s own home does not sell. This may be critical for the buyer, who is protected against having to buy before they have sold their current home. But the seller may call the contingency — which happens often, if the seller receives another offer — and the buyer may lose the deal if they cannot get their home sold within a short period of time. Likewise, a seller may list their home for sale contingent upon finding a new home.
Contingent, subject to third party approval: The buyer and seller have signed a purchase agreement, but the seller’s lender must approve the sale because the sale proceeds will not be sufficient to pay off the seller’s mortgage loan.
Contingent, subject to statutory right of rescission: The buyer and seller have signed a purchase agreement, but the buyer has a limited period of time to cancel the contract under a state law that provides a rescission period for the purchase of condos, townhomes, or cooperatives.
There are also other contingencies, including those related to financing, that fit into a different category. Ask your Realtor for insights about these types of contingencies and how they could affect your home purchase or sale.
Can I tour a home that’s listed as contingent?
Technically, yes. But not all sellers may be interested in having buyers in their home after they’ve accepted a purchase agreement.
Your REALTOR® can help you weigh the pros and cons of touring a contingent house; they can also help you set up the desired tours.
I’m sick of falling for houses that are contingent. How can I exclude them in my search?
In that case, you want to limit your search to homes with a “For Sale” listing status. When searching on edinarealty.com or our mobile search tools, you can filter by status to include or exclude listings that are:
- For Sale
- Active contingent