What is a Contingent House Listing?
Searching for a new house can be an exciting process. But it can also be stressful, especially if you have found the ideal home and it’s listed as “contingent.” While you can still make an offer on a property that is contingent, securing it isn’t always easy. It’s important to note that you can purchase a contingent home only if the current buyer’s deal falls through.
What is a Contingent House Listing
Contingent house listing should not be confused with “pending.” Unlike contingent listings, pending listings are not active.
In real estate, the term “contingent” means that an offer was made by a potential home buyer and accepted by the seller. However, certain criteria must be met before the deal can be completed. When an offer is contingent, a specific condition must be met before the sale can proceed. If the condition is not met, the contract is void. This means the seller can consider another offer they received.
Contingent house listing should not be confused with “pending.” Unlike contingent listings, pending listings are not active. Once an offer is accepted and any contingent conditions are satisfied, the house will be listed as “pending” until the transaction is finalized.
Common Types of Contingencies
Generally, the purpose of contingencies is to protect the buyer. They allow the prospective buyer to terminate the contract and walk away from the deal with no legal repercussions. Various contingencies can be used in a real estate transaction to protect the buyer from the risks of purchasing a home.
Some of the most common types of contingencies include the following:
- Home sale contingency — The sale will proceed only if the buyer can sell their current home first.
- Title contingency — Although title insurance helps protect buyers against title issues, a title search should also be conducted to ensure the seller has a clean title to transfer. If there is a problem with the title, a title contingency clause can serve as a safeguard, allowing the prospective buyer to back out of the contract.
- Home inspection contingency — This contingency allows a prospective buyer to engage a home inspector to evaluate the home’s condition. If the inspection reveals issues with the exterior or interior structure, the home inspection contingency permits a buyer to walk away from the deal, unless the seller agrees to remedy the defects.
- Mortgage contingency — A mortgage contingency gives a buyer a specified period to secure financing. While it’s always a good idea to obtain mortgage pre-approval, there can still sometimes be unexpected circumstances that arise that prevent you from obtaining a loan.
- Appraisal contingency — The appraisal contingency works along with the mortgage contingency. Significantly, a mortgage company cannot approve a loan amount exceeding the home’s fair market value. If the appraisal comes in below the price you agreed upon with the seller, this contingency allows you to walk away without penalties.
Contingencies can help to reduce legal disputes and conflicts. Nevertheless, they can still occur when a prospective buyer wishes to back out of a transaction.
Aventus Law Group assists clients in preparing and reviewing real estate agreements, addressing title and contingency concerns, and coordinating resolutions outside of litigation. Our firm does not handle courtroom proceedings or contested real estate disputes.
We focus on proactive solutions that minimize risk, promote clarity, and help clients avoid the time and expense of litigation.
If a situation escalates and requires formal court involvement, Aventus Law Group can provide a referral, upon request, to qualified attorneys specializing in real estate litigation, while we continue to support clients with advisory and transactional needs.
Should You Make an Offer on a Contingent House Listing
Several designations can indicate whether making an offer on a contingent property is worthwhile. For example, if a home is listed as “Contingent — Continue to Show,” it typically means that there are several contingencies to address. In such cases, the seller may be eager to see other offers. In contrast, the designation “Contingent — No Show” usually indicates the seller is confident the deal will close.
A contingency might also include a “kick-out” clause that would allow a seller to accept the best offer. The clause allows the seller to accept a new offer from a different buyer. While these situations are beneficial for the seller and the prospective buyer, they are detrimental to the current would-be buyer who has made an offer. Other designations prospective buyers should be wary of include “short sale contingent” and “contingent probate.” In both these cases, it is rarely worth the effort to make an offer.
If you are considering making an offer on a house that is contingent, it is helpful to understand the contingencies. This way, you can determine whether you might want to make a backup offer in the event the deal doesn’t make it to the closing table — or set your focus on a different property altogether. However, if you decide to make an offer on a contingent property, it may be best to prepare for disappointment if the situation does not work out in your favor. Also, if the prior prospective buyer’s deal fell through, you may want to review the details— especially if there were issues with the inspection —and be prepared to address similar issues.
