Real estate

What Does Contingent Mean In Real Estate?

I’m sure you must have seen the word contingent while going through listings as you were looking through properties that have been put up for sale.

You may be wondering what this means and its purpose in real estate, right?

If you’re a new buyer or seller in the market who is confused about whether or not to include a contingency in your contract, after going through this article, you’ll be able to make that decision.

In this article, you’ll discover what contingent means in real estate, what it’s all about, and how it works.

So, what does contingent mean in real estate?

Contingent is a term in real estate that indicates that a seller has accepted the offer made by a buyer to purchase his property; however, for the contract to be considered valid and the sale to push through, the seller has to meet certain standards.

To better understand what contingent means, let’s look at five (5) common types of contingency that exist.

They are:

  1. Appraisal Contingency.
  2. Home Inspection Contingency.
  3. Home Sale Contingency.
  4. Mortgage Contingency.
  5. Title Contingency.

Five (5) common types of contingency

Appraisal Contingency

This is common with buyers who need to get a mortgage to purchase the property.

The lender gets the house appraised to make sure the mortgage they’re offering is not greater than the worth of the property.

If the property is found to be of less worth than the mortgage, the lender can:

  • demand that a higher down payment is made by the buyer, to balance up the difference in the property price and how much the mortgage is worth.
  • Refuse to give the loan.

Accordingly, the buyer can pull out from purchasing the property when appraisal contingency is included in the contract.

Home Inspection Contingency

This contingency type allows buyers— with the help of a professional inspector— to examine the condition of the property offered to be sold. The places checked in the property will include places that were not at first thought of by the buyer.

After a proper inspection of the property, if the property needs repair, and the cost to repair the property is found to surpass the maximum amount that the buyer was willing to pay, for the repair of the property stated in the contract, the buyer can back out of the purchase or resolve the issue between him and the seller.

Home Sale Contingency

This is popular among buyers who intend to use the earnings they made from selling the property they own or live in.

Although not every seller accepts this contingency because they are well aware that other buyers will make them a better offer without including the home sale contingency.

For sellers who accept the offer of a buyer who includes this type of contingency, the buyer can state in the contract the deadline he has got to make the payment for the purchase of the property.

If the buyer doesn’t meet up with the deadline, the seller is free to accept another offer from a more capable buyer.

Mortgage Contingency

Any buyer who isn’t financially capable of purchasing the property before the offer has been made should get a mortgage that has been preapproved.

The buyer being pre-approved doesn’t guarantee his chances of becoming eligible for the mortgage.

However, this gives him an edge over those who were not pre-approved after the offer was made.

With this contingency included in the offer, the buyer can keep the earnest payment and be out of risk in case the mortgage application is denied to him.

Title Contingency

Another factor exists that can cause an offer that a seller accepted from a buyer to be withdrawn aside from high repair costs that the buyer didn’t budget for!

After a title search is conducted on a property put up for sale and a lien— a right to own a property of another until the debt of the owner is cleared— is found against the property, the buyer can

  • back out of the purchase.
  • Get title insurance that would protect against claims later in the future if the lien has been taken care of and the buyer still desires to purchase the property.

What Does Pending Mean In Real Estate?

Pending in real estate means that a seller has accepted the offer from a buyer and the deal is underway.

A seller is not allowed to consider another offer made by a buyer while the property that is put up for sale is pending. Although a backup offer can be considered. Similarly, the only time a seller is to consider or accept a new offer from another buyer is when the previous offer falls through.

Contingent Vs. Pending? What’s The Difference?

The difference between a property that is listed as Contingent and another listed as Pending is its transaction process.

Contingent means a property whose seller has accepted the buyer’s offer, but for the transaction to proceed, some criteria have to be met. On the other hand, Pending is used to describe a property whose seller has accepted the buyer’s offer and only paperwork is needed to close the deal, therefore the transaction is almost finalized.

Can You Put An Offer On A House That Is Contingent?

Yes, you can.

As long as you bear in mind that putting in an offer on a house that is contingent doesn’t guarantee you will get the house. This is because the existing buyer might fulfill the criteria needed to purchase the house.

Nonetheless, for instance; in situations where the existing buyer is not able to secure the mortgage needed to purchase the house, the seller can consider your offer.

How Often Do Contingent Offers Fall Through?

According to a survey recently conducted by the National Association Of Realtors (NAR), 6% of contracts got canceled as a result of unfulfilled contingencies from January to March 2022.

Buyers may have refused to pay high fees for the repair of the house they intended to buy, or they couldn’t get the mortgage approved. These but to mention a few may have contributed to contingency offers to fall through.

Also read: Real estate in the metaverse.


Now that you know what contingent means in real estate, and how it works, you can finally get on with those deals whether as a buyer or a seller and with the help of a professional real estate agent, close that deal!

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