What is Contingent vs Pending

Table Of Content

• Forms and Financing
• Can You Make An Offer On An Active Contingent Property?
• Financial contingency
• How Much To Offer On A House + Reasonable Offer Chart
• What Is an Appraisal Contingency? Understanding This Real Estate Contract Provision
• Contingent listing
• Contingent: With Or Without A Kick-Out Clause
• Contingent Status Types

This is used when the seller agrees not to show the home any longer while contingencies are being met. We believe everyone should be able to make financial decisions with confidence. It’s up to the individual owner and listing agent whether they’re still interested in receiving additional offers.

Forms and Financing

If you’re interested in a property that is listed with an active contingent status, you can make an offer. In many markets, pending homes are removed from public view, but agents can still negotiate backup offers. The word “contingent” means subject to change, but in real estate, there’s a little more to it. “Contingent is a legal framework in real estate contracts,” says Christa Kenin, a Douglas Elliman real estate agent. A short-sale contingent means the seller agrees to sell the home for less than the mortgage balance. The arrangement has to be approved by the lender that holds the loan, and it can take a lot longer to process compared to other types of sales.

Can You Make An Offer On An Active Contingent Property?

So if your dream home is labeled as pending, don’t give up hope just yet — it could still become available again for a myriad of reasons. You can reach out to the seller with your own offer so they’ve got your information ready in case the current buyer backs out. Miranda Crace is a Senior Section Editor for the Rocket Companies, bringing a wealth of knowledge about mortgages, personal finance, real estate, and personal loans for over 10 years. Miranda is dedicated to advancing financial literacy and empowering individuals to achieve their financial and homeownership goals. She graduated from Wayne State University where she studied PR Writing, Film Production, and Film Editing. Her creative talents shine through her contributions to the popular video series "Home Lore" and "The Red Desk," which were nominated for the prestigious Shorty Awards.

Financial contingency

When the housing market is hot, buyers may remove certain contingencies to make their offers more competitive. This carries more risk to the buyer if an inspection uncovers big repairs or appraisal amounts are higher than expected. Once the seller accepts the contingency offer from the buyer, they can take their house off the market and hope the rest of the purchase goes swimmingly. If they accept the contingent offer but still want to keep their options open, they can do what is called a kick out clause and keep their home on the market for other potential buyers. Understanding what an active contingent status is and how the home buying process works can be challenging for anyone.

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The multiple listing service (MLS) is a real estate marketing and advertising database that helps home buyers browse listings online. MLS can use different terminology when describing contingent statuses, so we’ll define these terms for you below. While the seller may welcome offers, they may not be able to accept your offer over the current buyer’s deal.

What Is an Appraisal Contingency? Understanding This Real Estate Contract Provision

In highly competitive seller markets, buyers sometimes waive them when they want to make their offers as attractive as possible. Everything may turn out fine if the buyer’s financing comes through, the home appraises high enough, the inspection doesn’t uncover major problems and the home’s title is clear. That said, waiving contingencies can be a devastating mistake if any serious problems arise. The seller has accepted an offer, but the probate court must approve the sale before it can close. Other potential buyers may be able to attend a court hearing and make a more competitive bid to purchase the property. This status can come up when the property of a deceased person is being sold as part of settling their estate.

And most likely, the way most of our contracts read, they could get their deposit back,” says top real estate agent Liz Donnelly, who closes 17% more sales than the average agent in Ventura, CA. A mortgage contingency is a clause that sets up certain conditions for a real estate transaction. A property with a pending status is further along in the transaction process than one with a contingent status. If you’re very interested in a property marked as pending, nothing would legally prevent you from making an offer on a pending home.

Contingent: With Or Without A Kick-Out Clause

Cathie Ericson writes about personal finance, real estate, small business, education, retail/ecommerce and other topics for a host of brands and websites. News & World Report, Forbes, Business Insider, The Oregonian, Industry Dive, Boston Globe, CNBC, MSN.com, Realtor.com and Yahoo Finance, among many others. The home’s title reveals who owns the house and who has owned it all along the way.

Contingent Status Types

If possible, start the approval process as soon as you’re ready to buy a home. This way, you’ll increase your chances of having the seller accept your offer, contingencies and all. Also known as mortgage contingency, the financing contingency states that the buyer can back out of the deal if they can’t get their loan to go through. According to NAR, 78% of recent buyers financed their home purchase in 2019, making this contingency incredibly common. Purchase mortgages today are taking over 40 days to close on average. Oftentimes, if you have the choice between a mortgage backed or cash offer, cash is king — though cash buyers pay 11% less on average compared to mortgaged buyers, studies show.

Most real estate contracts — or roughly 80% — contain contingencies, according to data from the National Association of Realtors (NAR). As of 2023, 79% of contracts included an inspection contingency while 82% contained an appraisal contingency. Once all contingencies are settled (or if there are no contingencies in the first place), the home sale is pending.

The contingency may outline the maximum amount that the buyer is willing to pay to repair the home. For example, it could allow them to back out of the purchase if expected repair costs exceed $10,000. In hot real estate markets, buyers who are facing stiff competition sometimes waive the inspection contingency. A pending status means the buyer satisfied all contingencies in the purchase contract and is near closing. It’s also possible that the sale transaction is complete on a home listed as “pending,” but the property’s status hasn’t been updated yet.

Sellers aren’t a big fan of sale contingencies, so they’ll often include a kick-out clause in the contract. That means the seller can continue to show the home and accept offers during the sale contingency period. If the seller gets a better offer, they’ll allow the original buyer 72 hours to drop the sale contingency and proceed with the deal. If the buyer can’t move forward, the seller “kicks them out” for the better deal. A contingency is a clause that buyers include when making an offer on a home that allows them to back out of buying the house if the terms of the clause aren’t met. Without a contingency in place, buyers risk losing their earnest money deposit if they decide not to purchase the home after making an offer.

There are a few different types of contingencies and while similar, they aren’t all alike. She also suggests touching base periodically to see if they’ve made progress on their home sale. This way, you maintain a positive relationship in case you decide to circle back to their offer.

The length of the active contingent period varies, but it's generally a few weeks unless it is a home sale contingency which can take up to a few months. It's important to note that unforeseen delays can occur at any stage, which may extend the overall timeline to the closing process. As you navigate them, it’s important to understand how they work for the best outcomes. If that happens, sellers are happy to fall back to one of these other offers, entertaining another prospective buyer without downtime.

Buying a new home while selling your current one can be overwhelming. Find out how to manage this process in the least disruptive and most cost-efficient ways. To better help you prepare for making a great offer on a home, you need to understand how contingencies work. Let’s take a look at the different types of contingencies you might come across in real estate. Are you a homeowner in Mesa looking to sell your house quickly for ca ...