What Does Contingent Mean In Real Estate

What does contingent mean in real estate

13 Jan 2020

Contingency denotes the agreement of sale has not been made for the transaction to close. It shows the seller has accepted the bid from the interest rates party/parties, which is predisposed to one or more than one type of unforeseen limitations. The purchaser may try to resolve it, while, other buyers continue to view the property in the listing and they also submit offers, which can be accepted by the owners’ who have given preference for multiple bids and What does contingent mean in real estate.

What does contingent mean?

It means the landlord (or his agent) agrees to the bid made by the purchaser but certain criteria have not been met. Such criteria or clauses in the sales contract fall under category – mortgage approval, inspection, and appraisal and contingent. Such issues should be put in place to avert the purchaser from backing out of the deal.

A proprietor may consider the bid even after the rejection from the purchaser but in most cases when such clauses lead to impediment in closing, the proprietor tries to resolve the issue to avoid delays in the next one.

What is an active contingent?

A landlord can illustrate the active status to sell the house. Active status indicates the property is “on sale.” It indicates the buyer’s offer has been acknowledged and the home is in escrow, which means, the purchaser and the seller are both working positively to get the deal.

The Difference Between Contingent and Pending in Real Estate

It means the bid is acknowledged by the property-owner but the listing is active as there are certain requirements, which should be met before closing.

In such cases, putting in an application where the bid is accepted and both parties move forward towards closing the deal. It means the inspection phase is over and the involved parties are waiting for financing and paperwork. It is also described as the period from the time the purchaser and landlord (or their agents), start the discussion.

Types Of Contingencies In Real Estate

There can be financing contingencies where the mortgage financing for the purchase outlines how the transaction can be financed. If the number of days is 10, the purchaser should arrange for the money in 10 days or they may lose the home to another buyer. If the shopper has deposited the earnest money, they may lose it as well in conditions when the deal is canceled.

The status can be of different types

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In the listing the type it shows the property holder was paying attention to the proposal but it hinges on certain criteria and the customer is working to settle the issue, while, other buyers continue to view and submit offers for the property.

No Show 

It is the method where the landlord accepts the bid with the status and they no longer accept other offers or show the house.


If the purchaser is unable to meet the deadline, the property holder may still show the home and accept bids from other buyers.

Home inspection

It is the condition where the buyer can inspect the property but it does not mean they can get out of the deal if they find problems. They need to get orders to scrutinize and review the property within the predefined duration. An advanced inspection limits the seller’s responsibility to do the maintenance. In such conditions, the property owner gets the option to pull out from the transaction without any penalty if the cost of repairs is higher than 2-3% of the sale price.


It is the option where the title to the property is the evidence of the ownership. It provides a legal document that shows who owned it in the past and it also depicts the legalities or issues involved in the deal. In such properties, the attorney reviews the title of the new property before closing.

What is a Contingent Offer?

It is common to find offers that have standardized contingencies. But there can be certain offers with undisclosed conditions and some of the examples are –


The offer where one states the inspection should be satisfactory but it does not indicate what terms are included in the condition to make it satisfactory.


It refers to the situation where the mortgage with no pre-approval, tiny down payment, and low internet rate, has not been approved.


There can be an appraisal contingency offer where the purchase of the property can happen only in the condition when the third party does the appraisal successfully – which helps the landlord know the fair market value of the house. It means the appraisal can tell if the sell property holder’s asking price is equal to or greater than the actual value of the residence. Buyers use this method to ensure the property is worth the money spent on buying. If the appraisal value is less, the purchaser can renegotiate on price with the seller or they can even terminate the purchase without losing the earnest money.

Sale and settlement 

Some are sale and settlement bids where the purchaser has to sell the existing house before they can purchase a new one. It means the purchaser has agreed to buy the residence but they need to make sure that the home they own is sold first. The bid means the buyer’s house is under contract and they need to wait till the closing of the first one. Once it is done they can purchase the next one. In such conditions, the seller can remove the property from the list and wait for the purchaser to sell their existing first.

What is Contingent vs. Pending?

Pending means, the offer has been acknowledged and the contingencies have been met. The homes can be in pending status if they are no more active. It can be converted into the final transaction but there are several stages involved in getting the contract. The proprietor can opt to withdraw in case the deal falls through. They may have to pay an earnest money deposit and an option fee with other offers. The proprietor can get a superior bid from other buyers’ where they may be presented with more money for waiving it. 

It refers to status when the bid has been accepted but the official procedures and the documentation has been left before the final closing and the status remains the same until the formalities are completed.

Pending can be of different types like –


The landlord or the negotiator agent can take backup offers for the proposal.

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A bid can be accepted but if the emergencies are not met there can be some sort of release or kick out clause for the parties involved, and in such cases, the seller can show the property and accept offers from other buyers’.

Do not show 

The sale can be hindered when the owner of the house is not showing or accepting any new bids. The home can be in the sale process for over a quarter of a year but if the status is in anticipation of completion for more than 4 months, it should show a tentative closing date or it is measured as “turned down.”

Alternatively, in contingent bids, a pre-approved purchaser may not accept it where there are problems due to spike in mortgage rates. A radical change in the financial status or delays in the documentation, when the property does not meet the lender’s requirement can lead to rejection even at a later stage.

Can you avoid real estate contingencies?

The sellers get multiple offers where they can opt for the non-contingent contract but there can be other ways to lower the risks like –

  • All-cash bid has a low risk. In such cases, the seller may ask for a deposit. The best way to avoid it is to carefully review the offer and make sure the buyer has extra cash to close the deal. Also, one can ask for copies of bank statements.
  • Some conditions/clauses are very complex and difficult to resolve. The purchaser and the seller should carefully review all the details associated with the deal and speak clearly to the brokers to get detailed information. Local attorneys who specialize in real estate deals can be contacted to know more.

What does contingent mean in reality?

It is a provision in a contract that requires the closing of an act or the happening of an event before the contract is made.

What does contingent mean in real estate listing?

With such listings, the contract depends on the buyer’s ability to sell the existing home and if the purchaser does not sell the home, he can back out of the contract.

Pending listing contracts can be based on short loan, inspection or appraisal types. 

Home listed as MLS indicates a rare specific contract for the buyer’s sale of a home.

 What does active contingent mean in real estate?

It shows the purchaser is motivated to buy and is interested in the property, and all the needed logistics related to the transaction are in place, where the logistics and paperwork can help to close the deal.

In the case of active status, the inspection; repairs, loan underwriting, and appraisals might have already been done. It may indicate the involved parties are waiting to get approval from the mortgage servicer of the seller.

What does contingent mean for a realtor?

For a realtor, it refers to the condition of the Agreement of Sale which needs to occur to ensure the transaction keeps moving forward. It indicates a collection of unforeseen events where one can choose to include the agreement offered by the buyer. 

What does contingent house mean?

It means the offer has been accepted by the purchaser but the parties involved are waiting for the deal to conclude as it undergoes the phase of inspection, financing, and acceptance of the legal contract. The period typically lasts between 30 to 60 days when the purchaser is not able to get a mortgage and the seller can cancel the contract anytime and find another purchaser if the deal takes more time to finalize.

One can remove the form the bid if they are confident that the purchaser they are talking to is interested in the closing on your home. The purchaser can remove the clause if they are sure that the seller is committed and is interested in closing the deal with you.

What does contingent mean in real estate terms?

In case a homebuyer makes such an offer it means the sale was delayed and may close only when certain conditions are met. In case the buyer finds something wrong they can back out without losing the earnest money deposited in the account. There are different types of such bids -

Financing contingency

It is the most common type of bid where the buyer faces issues in getting a mortgage for the home and they can drop out of the contract with no penalty.

Home sale 

It allows the homeowners to make an offer on a new home on selling their previous one. This helps the homeowners to reduce the risk of overlapping payments to maximize the chance of getting the approved for a new mortgage.


The appraised value of the home can be less than the purchase price and this can create delays where the purchaser wishes to renegotiate the purchase price or is thinking of refusing the contract.


It gives the purchaser the right to home inspection by a professional before concluding. In such cases, if the inspector finds any issue they can request the seller to fix it or they can even cancel the deal.

What does contingent mean on a home for sale?

Once an offer for the home is made and accepted, a closing date is set but it can get late from the time the agent shows the home to get the financing. Unless the deal is finalized the agent has no legal obligation to stop showing the property and as long as the buyer has accepted the offer and the contract to buy the home, the buyer has no worries, even if, the seller gets a better offer. The property owner cannot avoid the contract accepted once and they may have to wait until the closing date.

What does contingent mean in real estate sales? 

For real estate, it refers to the situation the buyer has accepted the proposition but the deal is conditional and many things are happening before the final closing takes place. It also indicates that if the deal is not closed within the set period, the transaction may be declined.

Should I accept a contingent offer on my house?

There are many pros and cons to accepting such a bid. Such bids help buyers who want to sell and buy at the same time. There can be multiple ways the bids are made –

  • It can happen the landlord keeps the property on market but accepts the offer which provides the buyer 72-hours negotiable duration with the first right of refusal notice where the house owner refuses the deal if they get a better one.
  • In some cases, the landlord can take the property off the market and wait for the buyer to sell the existing home.
  • The proprietors can accept the second option if there are no other ways the buyers can make an offer to purchase. They may not wait forever and may stipulate a date for the deal to close.

Pros and Cons of Whether You Choose Pending or Contingent

The economists and real estate professionals keep a tab on the index related to pending home sales. Such homes are considered a key indicator of market activity. A pending home sale takes place once the seller has accepted the bid and an agreement is made. If the home sale remains pending, it is no longer considered active on the local listing services, where the agents provide information on the available properties.

  • A pending property means the sale may happen where both the parties are trying to close the deal but there can be some issues or delays created by the financing contingency, paperwork or situations like sign off on the title.  
  • The best way a buyer can prepare for such sales is to have the necessary professionals of mortgage lender and the title insurance company. 
  • A licensed broker may advise on how to ask questions related to the pending issues. Once everything is checked, both the parties can negotiate or agree to waive the contingencies related to the appraisal or inspection.
  • The landlord should keep in contact with the mortgage lender to ensure the documents are provided without any issues with the mortgage underwriting. Delays in mortgage underwriting can delay the closing dates and it can create delays or disagreements for both the involved parties.
  • The seller’s role in pending status is to wait once all the documents are prepared by the buyer. The listing agent may schedule the inspection or appraisals but the seller should be present to allow people in.
  • The landlord should be aware of all the details related to the deal before finalizing it and they should be ready to back out any time when the buyer can legally cancel the deal without any reason.
  • A landlord can refuse to settle the price if the property appraises for lower value or when the seller declines to make the needed repair as a part of the inspection.

Can you put an offer on a house that is contingent?

A listing agent may continue to show homes to the buyers depending on the agreement the listing agent has with the person selling the home. In case the buyer owns the home, the ownership can be transferred to home and the buyer may not have the legal rights to control rights related to the property.

Risk Involved In Contingent Sale Real Estate Offer

There are certain contingencies in every real estate transaction. Most of these contingencies are normal and sellers are not worried about it- if they get the offer where the buyer wants to inspect the property or view the title report before finalizing.

In the case of such properties, the seller has to depend on the buyer’s timeline which can have one or two clauses in the contract related to the settlement clause or the sale clause. The settlement clause refers to the condition where the individual already has a buyer and they are waiting for closing the deal so that one can purchase their new home.

A sale and settlement clause means the person does not have any offers yet and they should sell or settle the home to purchase another. Before buying a new property, they need to advertise their old homes and they can amend the sale and settle clause to meet their specific criteria. In such situations, one may have to wait until the buyer accomplishes the sale before the contract moves forward. It means one may not be able to move fast and may end up waiting for weeks or months before the completion of the sale.

Some buyers may allow the seller to market their properties even when they are under contract. This makes it easy to move forward with a new buyer if it falls through. 

It allows the buyer to nullify the deal and walk away, and this raises the risk of the sale falling through and it may also result in the loss of marketing effort and time. 

Can a realtor show a house that is contingent?

It is legally permissible to show the property in case things fall through where the owners and the sellers allow the agent to show the property to prospective buyers.

What does backup status mean in real estate?

The stage when the property-owner signs a contract for sale and has entered the legal agreement with the buyer is the beginning of the process, which can go off the rails. Contingencies like mortgage appraisal, inspection report approval, and financing can result in fall through of the deal. When one writes a proposal to the buyer a seller’s home, the offer can turn into a contract when both the parties have agreed and have signed the deal.

In the state of California, entering multiple deals is considered illegal, but there are many such contracts where the property-owner may hold multiple backups but sign only one. These backups can be at the escrow end and contracted buyers may assume the property-owner seller is accepting the offer. Since no notice is needed as the original buyer has no obligation to perform as per the terms of the original contract e.g. to renegotiate or terminate the escrow in case the reason for delays in the contract is not resolved.

During the phase, sellers may collect backup offers form prospective buyers or they can move ahead with a new offer if the current contract falls out.

There are certain benefits of backups where the buyer may feel the house is under contract with the most preferred offer, nevertheless, there is no loss in having a backup. There are plenty of properties from where the buyer can choose and so it is not unusual to have multiple offers for the well-priced residences. As the seller cannot enter a new contract with another property-owner at one time when the residence is in escrow with the original purchases, the backup works as a placeholder where one can show interest.

Sellers may provide the priority position of the offer in case they have received multiple bids, and they may collect multiple back-ups or give priority based on the time, they received the bid or other factors.

Is contingent-sale real estate offer worth the risk? 

Selling is challenging work and there are many risks involved in such deals. Accepting such offers restricts the ability to promote the house to other interested parties. The MLS boards may ask the seller to change the listing to pending and it restricts the property from showing up on the home search sites. It also means that you won’t be able to get the backup, who can take up the deal if the current one fails to close.

If a seller gets a bid where the purchaser is interested, they can ask the buyer to remove the sale contingency and substitute it with the longer escrow. This makes the proprietor hold the earnest money deposit of the buyer that can compensate for the lost time.

In case the seller decides to decline the offer they can encourage the purchaser to follow up once they have cleared their backlogs like they have sold their own home. Mostly when the market is hot – the buyer can sell their home quickly and they still get the opportunity to strike the deal and contingent mean in real estate.

Such offers can be worth considering if the buyer’s offer is better than any other bid and the homeowner has been considering accepting it. When the price offered by the purchaser is good and the conditions of the market are good where one may not get a similar offer immediately, then one can consider such deals.

Also, the seller should be careful at the time of finalizing and closing the contract as the purchaser spells out when they list the property on the listing price. Since one does not understand the risks and stipulations associated with the bid, you need to make an informed decision before accepting it.

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