How Long Can a House Be Contingent?

Is ‘pending’ the same as ‘contingent’?

No, “pending” and “contingent” are not the same in real estate terms, though both indicate a house is under contract. A contingent status means the sale is still subject to one or more conditions that need to be met before it can proceed to closing. These conditions often include inspections, appraisal, and financing.

On the other hand, when a property is marked as pending, it signifies that all contingencies have been met or waived, and the sale is moving forward toward closing.

For a home shopper, a contingent status means there is a chance — albeit small — that the property might still become available, whereas a pending status indicates the sale is more likely to close. Later in this post, we’ll review all the different listing status labels.

When might a buyer request to extend a contingency period?

A buyer may request an addendum to extend a contingency period in several situations, reflecting the complexity and unpredictability of real estate transactions. These scenarios are designed to protect the buyer’s interests, allowing for additional time to fulfill or reassess the conditions under which they agreed to purchase the property. Here are common circumstances that might prompt such a request:

1. Delayed financing approval: If obtaining mortgage approval is taking longer than anticipated due to unforeseen lender delays or complications in verifying the buyer’s financial information, an extension of the financing contingency might be necessary.

2. Issues uncovered during inspection: Should the initial home inspection reveal significant problems, the buyer might need extra time to conduct more detailed inspections or obtain quotes for repairs. This could lead to an extension of the inspection contingency period.

3. Appraisal shortfalls: If the appraisal values the property lower than the agreed purchase price, the buyer may need additional time to negotiate with the seller, seek alternative financing, or challenge the appraisal.

4. Home sale delays: Buyers relying on the sale of their current home to finance the new purchase might request an extension if their existing property has not sold within the original contingency period. This allows them more time to sell their home without risking the loss of the new property.

5. Title or legal issues: Encountering problems with the property’s title or uncovering legal encumbrances can lead to requests for more time to resolve these issues, ensuring the buyer’s legal and financial safety in the transaction.

6. Appraiser or home inspector schedules: If the appraiser or inspector are not available due to scheduling conflicts, lack of availability, or delayed because of weather or travel time, a buyer or seller can request to extend the contingency period.

7. Personal circumstances: Unanticipated personal events, such as illness or changes in employment, might also lead a buyer to seek more time to fulfill their contractual obligations under the contingencies.

In each of these scenarios, an addendum to extend a contingency period must be mutually agreed upon by both buyer and seller. This addendum formally modifies the original purchase agreement, providing the necessary leeway for the buyer to address and resolve the issues at hand.

How often do contingent offers fall through?

While exact statistics can vary, it’s generally acknowledged within the real estate industry that only a small portion of contingent offers do not proceed to closing. According to data compiled over the years by the National Association of Realtors (NAR), it’s estimated that less than 5% fall through.

The likelihood of a contingent offer falling through depends on the specific conditions outlined in the offer and how challenging they are to meet within the agreed timeframe. Financing and inspection contingencies are among the most common reasons a deal might not close.

It’s important for both buyers and sellers to understand that contingencies offer protection but also introduce elements of uncertainty into the transaction. Working closely with real estate professionals and being prepared to address potential issues promptly can help mitigate the risk of a deal falling through.

Can I make an offer on a contingent property?

Yes, you can make an offer on a property that is listed as contingent, but as noted above, your chances that the home will be returned to an “active listing” status can be less than 5%. Your offer’s success will depend on the existing deal’s stability and the seller’s willingness to consider a backup offer that might lead to a smoother or more favorable transaction for them.

A backup offer places you next in line should the current deal not close. This can be appealing to sellers who want the security of a potential sale if the initial deal fails due to unmet contingencies. It’s important to consult with a real estate agent familiar with such transactions.

Making an offer on a contingent property also requires a clear understanding of the property’s current status.

What do the different listing status labels mean?

The status labels on home listings provide key information about where a property stands in the sales process. However, these labels can vary depending on the Multiple Listing Service (MLS) used. Here’s an overview of some common statuses:

• Active: Indicates the home is on the market and open for showings and offers. It’s available for purchase without any current offers or contingencies.
• Active under contract: This status means the seller has accepted an offer from a buyer, but the deal is not yet finalized, often due to pending contingencies or other closing procedures.
• Active contingent: Similar to ‘Active under contract,’ it indicates that the home is under contract in the early stages, and the sale is subject to certain contingencies being met.
• Sale pending: This usually means that contingencies have been cleared and the sale is moving forward. However, in some areas, it can indicate optimism from the seller that the deal will close, even if buyer contingencies are still being worked out.
• Active offer no bump: The property is still listed for sale, but the seller has accepted an offer and agreed not to accept other offers, even if they are higher or come without contingencies.
• Sold: The sale of the property has been completed and fully closed.

Additionally, you might come across these variations depending on the MLS:

• Contingent continue to show: Sometimes displayed as “Offer-Show,” this means the seller has accepted an offer with contingencies, but is still showing the property and may accept backup offers.
• Contingency no show (or no showings): The seller is not showing the property because an offer with contingencies has been accepted.
• Contingency with a kick-out clause: Sometimes displayed as “Offer-Bump,” this means the seller has accepted a contingent offer but can bump or “kick out” the buyer in favor of a better offer. (More on this below.)

How can I make a strong offer with fewer contingencies?

Because contingencies add uncertainty to a purchase offer, you can see why most sellers prefer offers with few or no contingencies. One way to remove the home sale contingency is to buy a house before you sell. But it’s likely you need the equity and proceeds from your current home to buy your next home.

This buy-sell conundrum can be solved with a modern Buy Before Your Sell program that allows you to use the equity from your current property to make a stronger, more competitive offer on the home you want

Here’s how HomeLight Buy Before You Sell works:

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

Partner with a top agent to make your best offer

Navigating the complexities of real estate contingencies can be challenging, especially in a competitive market. HomeLight can connect you with a top-performing agent who can:

• Help you build a compelling offer and strategize to make it stand out
• Clarify and craft contingency clauses
• Provide valuable insights about local market trends
• Employ expert negotiation skills
• Help you determine when to make an offer on a contingent property
• Advise you on the feasibility of adding or accepting specific contingencies
• Navigate tricky situations like kick-out clauses
• Help you to understand your options and react swiftly when needed

When you’ve found the perfect home, having a top agent by your side is not just about making an offer; it’s about making the right offer with the right strategy. A seasoned agent can be the key to securing your next home while protecting your interests throughout the process.

Ask your agent about HomeLight’s Buy Before You Sell program and how it can empower you to make a non-contingent offer by unlocking the equity in your current home.

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