Can You Make an Offer on a Contingent House? Here’s What to Expect

Why might a contingent house offer fall through?

Several factors can cause a contingent offer on a house to fall apart. Understanding these deal-breakers can help you decide if making an offer on a contingent house is the right move for you. Here are the most common reasons:

• Failed financing: If the buyer cannot secure a mortgage approval, the deal can’t proceed. Financing often falls through due to changes in the buyer’s financial situation or if they fail to meet the lender’s requirements.
• Low appraisal: Should the home appraise for less than the offer amount, the lender may not provide the necessary financing unless the buyer covers the difference, or the seller lowers the price.
• Home inspection issues: Significant problems uncovered during the home inspection may lead to negotiations that fall apart. Common issues include structural problems, outdated electrical systems, or major repairs needed.
• Buyer unable to sell their existing house: If the buyer’s offer is contingent on selling their current home and it doesn’t sell in time, they may need to back out of the purchase.
• Title search uncovers conflicts: A clear title is crucial for a sale to go through. If the title search reveals liens, disputes, or unresolved claims, these issues can derail the sale.
• Other surprises: Unexpected developments, such as changes in the buyer’s employment status, health issues, or even natural disasters affecting the property, can cause a contingent offer to be withdrawn.

Can I make an offer on a contingent house?

Yes, you can make an offer on a contingent house. Even if a house is listed as contingent, it doesn’t mean that the sale is guaranteed to close. With this in mind, many real estate agents will take the approach that “a house is always for sale until the closing date.”

Sellers who are unsure about their current buyer will sometimes accept backup offers on their contingent home. If their first buyer falls through, you might be able to intercept the ball…so to speak. But just as in football, interceptions take planning, timing, and luck.

For these reasons, it’s important to proceed with measured expectations. Your offer may either be a backup, or it might prompt the seller to actually reconsider their current position, depending on the specifics of your offer and the contingency clauses in the seller’s current offer.

Responses you could receive from your offer

After making an offer on a contingent house, the range of responses from the seller can vary. Here’s what you might hear back:

• No response from the seller: In some cases, the seller may not respond to your offer, especially if they are confident that the current deal will close without issues.
• We got it; we’ll call you (don’t call us): This response means the seller has received your offer and is perhaps keeping it on hold as a backup. They’re not actively considering it yet but will revisit if the current deal falls through.
• We like it; you’re first in line as a backup: A more encouraging response, this means the seller sees merit in your offer. If the initial deal doesn’t close, they’re considering moving forward with your offer next.
• We’ll accept your offer: On rare occasions if the contingencies in the current offer allow for it and the seller prefers your terms, they might accept your offer outright. This could happen if the current deal is shaky or if your offer is significantly better.

Each response has different implications for your home-buying journey, and understanding them can help you navigate the process more effectively. Always consult with your real estate agent to craft a strategic offer and to interpret responses from sellers accurately.

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Pros and cons of making an offer on a contingent home

Pros

• Opportunity to secure a desired property: Even if a house is under a contingent offer, situations can change. Your offer could become the primary one if the initial deal falls through, allowing you to purchase a home that perfectly fits your needs.
• Less competition: Because many buyers might overlook contingent listings, submitting an offer on such a property might mean you’re facing less competition, potentially giving you a leverage point.
• Negotiation leverage: If the seller is concerned about their current deal falling through, they might be more open to negotiating terms with backup offers, giving you potential leverage in terms of price or conditions.

Cons

• Uncertainty and potential for disappointment: The biggest drawback is the uncertainty. The original deal may go through, leading to disappointment and a potential waste of time and emotional investment.
• Complexity and delay: Making an offer on a contingent home can involve more complex negotiations and a longer waiting period, as you’re essentially in a holding pattern until the initial contingencies are resolved.
• Possible cost implications: Depending on your agreement and the length of time before the contingent offer is resolved, there might be costs associated with extending mortgage rate locks or incurring costs for additional inspections or legal consultations.

What are my chances of getting an offer accepted on a contingent home?

There are no exact statistics to measure your chances of getting an offer accepted on a contingent home. There are many variables at play, such as the real estate market, the details of the original contingency offer, and the seller’s motivations. According to data compiled by the National Association of Realtors (NAR), it’s estimated that less than 5% of purchase offers fall through.

Here’s a closer look at the factors that can influence your chances of success.

• The type of contingency: Offers with fewer and simpler contingencies are typically more appealing to sellers. If the original deal has complex contingencies that are unlikely to be met, your chances improve.
• The current market conditions: In a seller’s market, where demand outstrips supply, the chances of a contingent offer being accepted as a backup might be lower because sellers can afford to wait for more straightforward offers. Conversely, in a buyer’s market, your chances may increase.
• The appeal of your offer: Offers that are financially competitive, or those with flexible terms, might be more enticing to sellers. A higher offer, a larger down payment, or a willingness to overlook minor inspection issues can make your proposal stand out.
• Timing: Early offers might be more welcome as backups before the seller becomes fully committed to the contingent offer.

How can I make a better offer with fewer contingencies?

As noted above, sellers prefer offers with few or no contingencies. One way to avoid including a home sale contingency in your offer is through a modern Buy Before Your Sell program. These new, convenient programs use the equity from your current home to make a stronger, more competitive offer on your next home.

Here’s how HomeLight Buy Before You Sell works:

It takes only a few minutes to find out if your home is a good fit for the HomeLight Buy Before You Sell. There’s no cost or obligation to apply. With our innovative equity unlock calculator, you can be approved in 24 hours or less. Once approved, you can submit a strong offer with no home sale contingency. Then, you can sell your existing home with more peace of mind, and possibly staged to earn up to 13% more proceeds.

Partner with a top agent to craft your best offer

Whether you’re eyeing a home that’s caught your heart or simply exploring your options, a top real estate agent can make all the difference, even in the most complex situations. From advising on the right terms to negotiating on your behalf, their expertise can be your greatest asset in turning your home-buying dreams into reality.

If you’re ready to make a move on a contingent home or any property on the market, HomeLight can connect you with the right professional for your needs. Our platform analyzes over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs. You can also ask your current agent about HomeLight Buy Before You Sell to streamline the entire process.

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