What does contingent mean on Realtor?

When browsing through real estate listings, you may have come across the term “contingent” on a property’s status. This term can be confusing for those who are not familiar with the real estate industry, but it is an important concept to understand when buying or selling a home. In this article, we will delve into what contingent means on Realtor and how it affects the buying and selling process.

Definition of Contingent

In simple terms, contingent means that a property has an accepted offer on it, but the sale is not yet final. The sale is contingent upon certain conditions being met, which can vary depending on the specific situation. These conditions can include financing, home inspections, or the sale of the buyer’s current home.

Types of Contingencies

There are several types of contingencies that can be included in a real estate contract. These contingencies protect both the buyer and the seller and allow them to back out of the contract if certain conditions are not met.

1. Financing Contingency: This is the most common type of contingency and is included in almost every real estate contract. It states that the sale is contingent upon the buyer being able to secure financing for the purchase. If the buyer is unable to obtain a loan, they can back out of the contract without any penalty.

2. Home Inspection Contingency: This contingency allows the buyer to have a professional home inspection done on the property. If any major issues are found during the inspection, the buyer can request repairs or back out of the contract.

3. Appraisal Contingency: This contingency states that the sale is contingent upon the property being appraised for at least the agreed-upon purchase price. If the appraisal comes in lower, the buyer can renegotiate the price or back out of the contract.

4. Sale Contingency: This contingency is used when the buyer needs to sell their current home before purchasing a new one. It allows the buyer to back out of the contract if they are unable to sell their home within a specified time frame.

Impact on the Buying Process

For buyers, contingent properties can be both a blessing and a curse. On one hand, it means that the seller has accepted their offer, giving them a better chance of securing the property. On the other hand, it also means that the sale is not yet final, and there is a possibility of losing the property if the contingencies are not met.

If you are interested in a contingent property, it is important to act quickly and make a strong offer. The seller may still entertain other offers, and if a better one comes along, they can accept it and back out of the contract with the current buyer.

Impact on the Selling Process

For sellers, accepting a contingent offer can be a risky decision. It means that they have to take their property off the market and wait for the buyer to fulfill the contingencies. This can delay the sale process and potentially lead to the property being back on the market if the contingencies are not met.

However, accepting a contingent offer can also be beneficial for sellers. It means that they have a serious buyer who is committed to purchasing the property. It also gives them a backup plan in case the sale falls through, as they can still entertain other offers while the contingencies are being fulfilled.

Final Thoughts

In conclusion, contingent means that a property has an accepted offer, but the sale is not yet final. It is a common term used in the real estate industry and is an important concept to understand for both buyers and sellers. Contingencies protect both parties and allow them to back out of the contract if certain conditions are not met. If you are interested in a contingent property, it is important to act quickly and make a strong offer. And for sellers, accepting a contingent offer can be a risky but potentially beneficial decision.