What does “contingency” mean in a real estate advertisement?


A contingency can make or break your real estate sale, but what exactly is a conditional offer? “Contingency” might be one of those real estate terms that makes you go “Huh?” But do not worry. We’ve all been there and we’re here to help clear up the confusion.

“A contingency in a transaction means that the buyer must do something to move the process forward, whether it’s getting approved for a loan or selling a property they own,” explains jimmy branham of the Keyes company in Coral Springs, Florida.

If the buyer is having trouble getting a mortgage, or the property’s appraisal is too low, or there is some other problem getting a mortgage, a contingency clause means the contract can be terminated without penalty or loss of deposit for the buyer or seller.

So when ‘contingency’ appears in the listing itself, “it means that the sellers have already accepted an offer on the property (at least regarding the price), but there are still steps to go through before the contract is fully pending in the system,” says Stephanie Crawforda Realtor® in Nashville, TN.

Here are some common contingencies that could delay a contract:

  • The buyer is waiting for the home inspection report.
  • The buyer’s mortgage pre-approval letter is still pending.
  • The buyer has a contingency based on the appraisal.
  • If it’s a real estate short sale, which means the lender has to accept a lower amount than the mortgage on the house, a contingency could mean that the buyer and seller are waiting for approval. price and terms of sale by the investor or lender.
  • Both seller and buyer are awaiting official documentation for short sale terms that have been verbally or informally approved.
  • The potential buyer is waiting for a spouse or co-buyer who is not in the area to sign the sale of the house.

Not all conditional offers are marked as a contingency in the property listing. For example, purchases made with a mortgage usually have a financing contingency.

Obviously, the buyer cannot buy the property without a mortgage. However, real estate is usually shown as “on hold” in the real estate listing, rather than having a contingency, if the buyer’s only contingency clause is a financing contingency, inspection contingency, or another standard eventuality.

Should you bid on a contingency list?

Your ideal new home might be listed as having a contingency, which means sellers have accepted an offer from a buyer, subject to one or more contingencies. So is it still worth suing the house?

Most experts say you’re probably too late for the game. But you should never say never, especially if you’ve fallen in love with the house. Even contractual agreements can sometimes fail due to a contingency, so all hope may not be lost.

The seller might be willing to continue showing the property during this time, but if it’s a home you’re interested in, talk to your real estate agent.

It doesn’t matter what the contingency is for. If the sale has a contingency based on buyers selling their current home, for example, sellers may accept other offers. If they’re just waiting for an assessment or the completion of a termite inspection eventuality, you’re probably too late.

“In the agent’s comments on MLS listings (which the general public can’t see), they’ll usually state what the emergency clause is for and when it’s over,” explains Dale Spillway, realtor in Chesterfield, MO. This should give you a better idea of ​​your chances with the house.

Still, if the current contract hinges on a clean home inspection and the buyers back out, you might want to reconsider the jump in yourself. The building inspector may have found something that would make the property undesirable or even allow the purchase price to be renegotiated.

Sometimes the deal fails for reasons that may be entirely justified – don’t let your obsession with the house cloud your judgment as a buyer.

If you are in the market for buying a home and the property you like is listed as contingent, you can also place an alert on the listing. This way, you can receive notification as soon as the real estate transaction fails and is back on the market.

Can you bid on a conditional listing?

There are no rules prohibiting buyers from bidding on a conditional listing. If you’re up for a waiting game, go for it. But the sellers might not consider the offer, depending on what the sellers (and their real estate agent) promised the other potential buyer.

To strengthen your offer, consider writing an offer letter to the landlord, explaining why you are the ideal buyer, or even making your real estate contract one with zero contingenciesor with as few contingencies as you are comfortable as a homebuyer.

Just be aware that this can be a risky decision: make sure that the real estate contract offers you a solution. It wouldn’t be good to lose your earnest money deposit if something inconvenient comes up during the home inspection, for example, or if you don’t qualify for a mortgage.

Conclusion: Talk to your real estate agent to determine if it makes sense to make a real estate offer on a conditional listing. Your agent should know if it’s worth going all out for this property or you’re wasting your time.

If you decide to drop the listing, be sure to view the properties you are interested in as soon as they are listed to avoid this problem in the future. If you are in a hot market, properties can move quickly!

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