Buying or selling a home can be a complicated process. If you’re not familiar with the real estate terms, it can be even more difficult. One term that you may have heard is “contingent.” What does contingent mean in real estate? And what implications does it have for buyers and sellers? Read on to find out.
In real estate, a home is considered to be under contract when both the buyer and the seller have agreed to the sale, but the sale is not final until certain conditions are met.
For example, a home may be contingent on the buyer getting a loan or the seller finding another home to purchase. If one of these conditions is not met, then the deal can fall through and the home will go back on the market.
Table of Contents
• What Does Contingent
• Common Contingencies In Real Estate
• Contingent vs Pending
• Offer On A House That Is Contingent
• How Long Does A House Stay In Contingent
• Contingency Removal
➥What Happens If A Contingency Is Not Met
• Buyer Does Not Remove Contingencies
• What Happens After All Contingencies Are Removed
• Can Seller Sue Buyer For Backing Out
➥Sell Your House To ASAP CASH Offer
What Does Contingent Mean In Real Estate Terms?
“Contingent” refers to a property that is under contract with contingencies. This means that an offer has been accepted by the seller, but the sale is contingent on certain conditions being met and the house isn’t considered sold until those conditions are met.
A contingency is a clause in the contract that must be met in order for the sale to go through or for the contract to be valid. If the contingencies are not met, the deal can fall through and the buyer is released from their obligation to purchase the property.
Common Contingencies In Real Estate
There are several common contingencies that are included in real estate contracts, including:
- Financing contingency: This contingency protects the buyer if they are unable to obtain financing to purchase the property.
- Appraisal contingency: This allows the buyer to back out of the deal if the property does not appraise for at least the purchase price.
- Home inspection contingency: This gives buyers the opportunity to have the property inspected and to back out of the deal if they are not satisfied with the results of the inspection.
- Sale of home contingency: This is common in situations where the buyer needs to sell their current home in order to purchase the new one. It allows them to back out of the deal if their home does not sell within a specified time period.
Contingent vs Pending
It’s important to note that the terms “contingent” and “pending” are often used interchangeably, but they actually have different meanings. Pending means that an offer has been accepted by the seller and all contingencies have been met. The sale is in the process of being finalized and is just waiting to close. Once all of the contingencies have been met and the sale is pending, the buyer is considered to be in escrow. This means that they have deposits held by a third party (usually the title company) and are just waiting for the final steps to be completed.
On the other hand, contingent means that an offer has been accepted by the seller, but there are certain conditions or requirements to be met.
Call Now (818) 651-8166
Why Sell Your Home to ASAP Cash Offer?
- You Pay Zero Fees
- Close quickly 7-28 days.
- Guaranteed Offer, no waiting.
- No repairs required, sell “AS IS”
- No appraisals or delays.
Can You Put An Offer On A House That Is Contingent?
If you’re interested in purchasing a home that is already under contract with contingencies, you may be able to submit a backup offer. A backup offer is an offer from a second buyer that will only come into effect if the original deal falls through.
For example, let’s say that you find your dream home, but it’s already under contract with a contingent offer. If you really want the house, you may be able to submit a backup offer to the seller. If the original deal falls through (because the buyer is unable to obtain financing or meet one of the other contingencies), then your backup offer will become active and you’ll have the opportunity to purchase the home.
How Long Does A House Stay In Contingent Status?
The length of time that a house stays in contingent status can vary depending on the contingencies that are included in the contract. For example, if the sale is contingent on the buyer obtaining financing, the process may take a few weeks. However, if the sale is contingent on the buyer selling their current home, it could take months.
It’s important to remember that, even though a home is in contingent status, the buyers are still obligated to purchase the property if the contingencies are met.
Contingency Removal
The only way to remove a contingency is to renegotiate the contract with the seller. If the buyer and seller agree to remove the contingency, then it will be removed from the contract. However, if the seller does not agree to remove the contingency, then it will remain in place.
What Happens If A Contingency Is Not Met?
If a contingency is not met, then the buyer is released from their obligation to purchase the home. For example, if a sale is contingent on the buyer obtaining financing and they are unable to do so, then they can back out of the deal without penalty.
It’s important to remember that, even though a contingency gives the buyer an “out” if certain conditions are not met, it’s still a binding contract. This means that, if the buyer backs out of the deal for any reason other than the contingencies being met, they may be subject to legal action from the seller.
Call Now (818) 651-8166
Why Sell Your Home to ASAP Cash Offer?
- You Pay Zero Fees
- Close quickly 7-28 days.
- Guaranteed Offer, no waiting.
- No repairs required, sell “AS IS”
- No appraisals or delays.
What Happens If Buyer Does Not Remove Contingencies?
If the buyer does not remove their contingencies within the specified timeframe, then the seller can cancel the contract. In this case, the buyer would forfeit their earnest money deposit and would not be entitled to purchase the home.
What Happens After All Contingencies Are Removed?
Once all contingencies have been removed, the sale is considered to be “pending” and is in the process of being finalized. The buyer is considered to be in escrow at this point, which means that they have made a deposit (usually 10% of the purchase price) that is being held by a third party (usually the title company). The final steps in the process will be completed and the home will officially change hands on the closing date.
Can Seller Sue Buyer For Backing Out?
If the buyer backs out of the deal for any reason other than the contingencies being met, then the seller can sue them for breach of contract. In this case, the buyer would be responsible for paying any damages that the seller incurred as a result of their breach.
It’s important to remember that, even though a contingency gives the buyer an “out” if certain conditions are not met, it’s still a binding contract. This means that, if the buyer backs out of the deal for any reason other than the contingencies being met, they may be subject to legal action from the seller.
Why Should You Sell Your House To ASAP CASH Offer?
Are you having a hard time looking for someone to purchase your home? ASAP CASH Offer is a real estate company that specializes in buying houses in as-is condition. This means that we will purchase your home regardless of its condition. We are also able to close on your home in as little as 7-28 days, which means you won’t have to wait months to sell your home. Contact us today to learn more about how we can help you!
