What is a Contingent House Listing?
February 3rd, 2022
Searching for a new house can be an exciting process. But it can also be stressful — especially if you found the ideal home and it's listed with a "contingent" status. While you can still make an offer if a property is contingent, attaining it isn't always easy. It's crucial to be aware that you will only be able to purchase a contingent home if the current potential buyer's deal falls through.
What is a Contingent House Listing?
In real estate, the term "contingent" means that an offer was made by a potential home buyer and accepted by the seller. However, certain criteria must be met before the deal can be completed. When an offer is contingent, a specific condition must occur before the sale can move forward. If the condition is not met, the contract is void. This means that the seller can move on to consider another offer they had received.
Contingent house listing should not be confused with "pending." Unlike listings that are contingent, those that are pending are not active. Once an offer has been accepted and any contingent conditions have been satisfied, a house will be listed as "pending" until the transaction is finalized.
Common Types of Contingencies
Generally, the purpose of contingencies is to protect the buyer. They allow the prospective buyer to get out of the contract and walk away from the deal with no legal repercussions. Various types of contingencies can be used in a real estate deal to protect the buyer from the risks associated with purchasing a home.
Some of the most common types of contingencies include the following:
- Home sale contingency — With a home sale contingency, the sale will only go through if the buyer is able to sell their current home first.
- Title contingency — Although title insurance helps protect buyers against any title issues that could arise, a title search should also be conducted to ensure the seller has a clean title to transfer. If there is a problem with the title, a title contingency clause can serve as a safeguard to allow the prospective buyer to back out of the contract.
- Home inspection contingency — This type of contingency allows a prospective buyer to bring in a home inspector to evaluate the condition of the home. If the inspection reveals issues with the exterior or interior structure, the home inspection contingency permits a buyer to walk away from the deal, unless the seller agrees to remedy the defects.
- Mortgage contingency — A mortgage contingency provides a buyer with a specified amount of time to secure financing. While it's always a good idea to obtain mortgage pre approval, there can still sometimes be unexpected circumstances that arise that prevent you from obtaining a loan.
- Appraisal contingency — The appraisal contingency works along with the mortgage contingency. Significantly, a mortgage company cannot grant a loan above the home's fair market value. If the appraisal comes in below the price you agreed upon with the seller, this contingency lets you walk away without any penalties.
Contingencies can help to reduce legal disputes and conflicts. Nevertheless, they can still occur in some cases when a prospective buyer wishes to back out of a transaction. A real estate attorney can best advise you regarding which contingencies can offer you the legal protections necessary in your situation.
Should You Make an Offer on a Contingent House Listing?
There are a number of designations that can provide information as to whether making an offer on a contingent property is worthwhile. For example, if a home is listed as "Contingent — Continue to Show," it typically means that there are several contingencies to address. In such cases, the seller may be eager to see other offers. In contrast, the designation "Contingent — No Show," usually means the seller is confident that the deal will make it to the closing table.
A contingency might also have a “kick-out” clause that would effectively allow a seller to get the best possible offer made. The clause allows the seller to accept a new offer from a different buyer. While these situations are beneficial for the seller and the subsequent prospective buyer, they are bad for the current would-be buyer who put an offer in. Other designations prospective buyers should be wary of include "short sale contingent" and "contingent probate." In both these cases, it is rarely worth the effort to make an offer.
If you are considering making an offer on a house that is contingent, it can be helpful to know what the contingencies are. This way, you can determine whether you might want to make a backup offer in the event the deal doesn't make it to the closing table — or set your focus on a different property altogether. However, if you decide to put an offer in on a contingent property, it may be best to prepare yourself for disappointment should the situation not work out in your favor. Also, if the prior prospective buyer's deal fell through, you may want to look into the details — if there were problems with the inspection, you will want to be prepared to face the same issues.
Contact an Experienced Florida Real Estate Attorney
If you're thinking about purchasing a new home, it's best to have the knowledge of an experienced real estate attorney who can help you navigate the process and avoid any pitfalls. Offering personalized legal services and individualized attention, the real estate attorneys at Waugh PLLC provide diligent counsel and skilled representation to clients throughout Florida regarding all aspects of the home-buying process. We welcome you to contact us at firstname.lastname@example.org or call (321) 499-9551 to learn how we can assist you with your real estate matter.
Categories: Real Estate Law