Defining Contingent and Pending Listings
What does contingent mean if a home is marked contingent?
“Contingent” or “pending” status means that a seller has accepted an offer from a buyer that may contain contingencies. Contingencies are simply conditions that the buyer or seller, or both must meet for the sale to close. For example, a buyer may place an offer on a home, but the offer is contingent on the buyer selling their current home first or contingent on obtaining a mortgage.
What does contingent mean for the buyer and seller?
Based on the terms and conditions in the Offer to Purchase and Contract (OTP&C), there are different contingencies and each one comes with different obligations. Once a contract is accepted, the buyer and seller have contractual obligations and only the buyer has the option to walk away. While the home is marked, contingent, the seller cannot accept another offer.
A contingency occurs when the buyer has a binding contract and a closing date for existing home. The property does not change to sold status until closing; the contingency protects the buyer if the sale falls through. This type of contingency does not allow the seller to accept other offers for a specified time in the contract agreement due to contractual obligations. However, the seller can accept backup offers when the home is marked contingent.
What does pending status mean when searching for a home?
Pending means that the seller has accepted a buyer’s offer. Unlike a contingent status, the seller has accepted an offer but must still meet some requirements, pending usually signifies that the contingencies have been met, the contract has been signed. Pending status does not mean the sale is still active, other buyers cannot view or place offers on the property.
Can offers be submitted on a contingent listing?
With a contingent listing, buyers can submit offers on the property. Moreover, a contingent status means that the property is still an active listings and can fall through if the buyer does not meet requested provisions in the Offer to Purchase and Contract (OTP&C). Example, buyer’s contingency depends on their ability to sell their current home. In this circumstance, the seller would most likely consider other offers if the buyer cannot sell their existing home.
Pending verses Contingent.
A home in contingent status is still technically an active listing and the seller can entertain other offers. Pending status, however, means that the status is no longer active, and the home can no longer schedule showings to view the property.
- Appraisal contingency: An appraisal contingency benefits a buyer to ensure they are not paying more than what a property is worth. If the home appraises less than the selling price, the buyer can pay the difference, negotiate with the seller ask to lower the purchase price or walk away.
- Home inspection contingency: If the home inspection reveals several issues, such as roofing problems, plumbing issues, structural problems, electrical deficiencies, and other significant problems, the buyer can place a contingency that those issues be fixed. Buyer can negotiate with seller to lower purchase price to offset repairs. If the issues are not resolved or the price is not reduced, the buyer will have the option to walk away.
- Additional inspection clauses: The buyer may request: Radon testing, well water testing, checking for mold, and testing for the presence of lead paint.
- Sale contingency: A sale contingency provides the buyer time to sell and close on their existing property to finance the new home. This type contingency protects the buyer if their current home does not sell enabling the buyer to backout of the contract without legal repercussions.
- Financial contingency: Protects the buyer from losing their deposit if they are unable to obtain a loan. If a financing contingency is executed, if the buyer cancels the contract their deposit is returned.
Sellers are not obligated to accept contingencies; however, not considering them may reduce the likelihood of securing a deal. If the buyer is restricted from including contingencies with their offer, they may be forced to consider other properties.
A contingent offer can put the buyer at risk of not getting the property, it does provide a set time for the buyer to sell their current home, or secure financing.
If the status of a property listing is contingent, you can submit a backup offer in the event the current contract falls through.