What does contingent mean in real estate?
Learn about common types, their impact on buying, and key real estate terms.
So what does contingent mean in real estate?
Credit:Edmund Barr
A contingent offer has a meaning all its ownone that can make or break a deal.
This is absolutely false if there are contingencies in your contract.
What Does Contingent Mean?
The word contingent means subject to change, butin real estate, theres a little more to it.
Contingent means certain events or conditions must occur for a real estate deal to move forward.
Typically, contingencies center around a buyers financing.
For example, it is common to seemortgage contingency clausesin contracts.
What Does Under Contract Mean?
This status can refer to homes with contingent offers in place.
‘Active under contract’ means the seller has accepted an offer but is still open to backup offers.
It also may indicate that the buyers property has sold and that obstacle to closing has been removed.
What Does As Is Mean?
When a home is being sold as is, some contingencies cant come into play, Kenin says.
Instead of contingent, sometimes a property is listed as is.
In this situation, a buyer may still conduct a home inspection.
However, theinspection resultswill be for information purposes only and not for negotiation purposes.
Types of Contingencies
What does contingency mean in real estate?
It refers to conditions that must be met before a home sale is finalized.
Here are some contingencies you may encounter other than finding financing for the home.
There are different forms that play into timelines and the ability for a buyer to potentially cancel a contract.
States differ dramatically on the process.
Financing contingencies allow the buyer a certain period of time to formally obtain financing.
Home Inspections
Another common contingency ishome inspections.
Kenin explains that these contingencies allow the buyer to hire someone to inspect the homes condition and safety.
First, the buyer can ask the seller to remedy the issues before the closing date.
Finally, the buyer can walk away depending upon the scope of the contingencies.
Insurance Availability
Many offers are contingent upon a buyer being able to secure insurance for a home.
It can also be the case if a home has had unpermitted work done.
Ask if the work was permitted, and be sure to verify independently of the seller’s answer.
Thats because contingencies can be roadblocks to a closed and final deal.
Who Benefits from Contingencies?
Contingenciesbenefit buyers morethan sellers, Kenin explains.
Sellers are typically forced to accept some level of contingencies, Kenin says.
Just because a home has a contingent offer in place doesnt mean its off the market.
you might often still get a tour of the properties.
Once a property is pending in our system, parties could negotiate a backup offer, Schemmel explains.
Essentially, the backup offer only comes into force if and when the first contract is canceled.
It is contingent on the existing binding contract on the property being canceled.
In many markets, pending homes are removed from public view, but agents can still negotiate backup offers.
Regardless of market conditions, Davenport says many sellers are reluctant to accept offers with lengthy contingencies.
Navigating Offers with Contingencies
In most markets, contingent offers are a necessity.
As you navigate them, its important to understand how they work for the best outcomes.
Taggart also suggests that agents talk at length before drawing up a contingent offer.
This gives both parties a better picture of the game plan for any unmet contingencies, he says.
Its best to be prepared ahead of time so late in the process.
To avoid delays with an inspection contingency, line up a home inspector before making an offer.
Last-minute scrambling can add unnecessary stress.
Frequently Asked Questions
This period usually lasts between 30-60 days.
An inspection contingency clause usually allows 10 days for home inspections.
If the seller is entertaining backup offers, it can be worthwhile to look at contingent houses.
