Real estate terminology. Not everyone gets it, and that’s OK.
However, if you are buying or selling real estate, you will need to learn terms that play an essential role in the real estate sector and what they mean, ESPECIALLY if you are a first-time homebuyer.
If you are on zillow.com or realtor.com and see a home with a contingent status, you may be wondering what contingent means. The answer is quite simple (but complicated at the same time).
If you are looking for houses for sale and stumble upon a listing that says contingent, you may wonder what the meaning of contingent, contingent on, or contingent upon means.
Contingent is a term that describes the status of the piece of real estate.
If you are interested in a home with a contingent status, it means that (sadly) an offer on your dream home has already been made. It also means that the seller accepted the offer.
But there is a catch. A stipulation that has caused the home to (technically) stay on the market. Before the final sale can advance, some changes need to happen when a piece of real estate has a contingent status.
Changes are agreed upon between the buyer and seller before the contingent status is put into place. The sale of the house WILL NOT happen if said changes aren’t made. The changes could involve home inspection or even the buyer finding a mortgage lender. Whatever the reason, any contingent real estate listing will remain active until the contingency has been fulfilled. This means that if you are interested in a piece of real estate with a contingent status, you may still have a chance to obtain it.
If a piece of real estate went from contingent to pending, it is more likely that the sale won’t fall through.
For a listing to go from contingent to pending, the contingency needs to be fulfilled and the offer officially accepted. After that, the parties involved just have to go through the final paperwork, and the closing needs to take place.
During that time, the listing status is pending. Therefore, a pending listing is a listing where the sale of the house is almost complete, and rarely are there any major issues that cause the sale to fall through.
After everything is complete and all legal work is finished, the listing status will move to sold. It is much less common for a sale to fall through once the listing status is pending versus when the status is contingent because the sale is almost complete.
In most cases, you can place an offer on a contingent listing.
Contingent listings technically are still active. Therefore, if the contract is broken, the sellers may consider your offer.
An Example Of A Contingent Offer Falling Through: One example of this would be if the contingency depends on the buyer getting a loan for the house and they aren’t able to.
Therefore, if you are looking at a house that you want to put an offer in but the status is contingent, talk to your real estate agent and see what your options are based on the situation.
There are quite a few types of real estate contingencies.
Here are a few examples of some of the most popular real estate contingencies:
Financing Contingency: A financing contingency is a type of contingency where the buyer asks for time to get financing for the seller’s home to have the funds to purchase it. This type of contingency is suitable for the buyer because they can back out of the sale if they can’t access the proper funds for purchasing. Additionally, with a financing contingency, the buyer has a certain amount of data to secure the funds for buying the seller’s home.
Appraisal Contingency: This type of contingency also protects the buyer. An appraisal contingency is when the buyer has time to appraise the home they are interested in purchasing. An appraisal is critical because an appraisal will let the buyer know if the home they wish to purchase is valued at a certain minimum amount. This contingency ensures that the buyer is not ripped off or sold a piece of real estate far below the buyer’s value. Many times, with this sort of contingency, the seller has an opportunity to lower the price of a piece of real estate they are selling if the appraisal comes back lower than what’s the specified amount is.
Sale Of Home Contingency: The home sale or sale of home contingency is when the buyer needs to sell their home before purchasing the seller’s home. If the buyer doesn’t sell their home within a certain period; they can back out of their deal with the seller. This type of contingency poses a significant risk to many sellers. If it is a seller’s market, it’s far more unlikely that a seller would agree to this type of contingency as the risk would be too great when there is a high chance of other willing buyers.
Now that you know what contingent means (and how the status is different than pending), and some different types of contingencies, you should be able to understand the status of a real estate listing. It’s beneficial for you as a homeowner or potential homeowner to have more knowledge about some important real estate terminology that will help you on your current or future house hunting journey.