How Long Can a House Be Contingent?
If you’re shopping for a home, you may be filled with anticipation with each listing you review. Perhaps you’ve found a house you love, but it’s labeled with a “contingent” status. Do you make an offer anyway? Do you wait it out? How long can a house be contingent?
Contingent listings can be puzzling and sometimes frustrating — especially when you’re searching for your dream home.
In this post, we’ll unpack real estate contingencies, clarify the difference between contingent vs. pending, and explain how long a house might remain labeled as contingent. We’ll also share how you can make a strong offer with fewer contingencies.
What does contingent mean?
In real estate, when a house is listed as “contingent,” it means the sale of the property is conditional upon certain criteria being met. These conditions, or contingencies, are agreed upon by the buyer and seller during the negotiation phase. Essentially, the deal can proceed to closing only if these specified conditions are fulfilled.
Contingencies are designed to protect both parties involved, allowing the buyer to back out of the purchase without penalty under specific circumstances, such as issues discovered during a home inspection or difficulties obtaining financing.
Examples of real estate contingencies
These conditions, set during the negotiation phase, can significantly impact the progress and outcome of a home sale. Here are some of the most common contingencies you might encounter:
Home sale contingency: This allows the buyer a specified amount of time to sell their current home. If the buyer’s home sells by the agreed-upon date, the deal proceeds; if not, the buyer can back out without losing their deposit.
Inspection contingency: This gives the buyer the right to have the property inspected within a certain timeframe. If significant defects are found, the buyer can renegotiate or withdraw from the sale without penalty.
Appraisal contingency: This ensures that the property must be appraised at a value equal to or higher than the sale price. If the appraisal comes in lower, it opens the door for renegotiation or allows the buyer to cancel the contract.
Mortgage or financing contingency: This loan contingency stipulates that the buyer must secure financing from a bank or other financial institution. If the buyer cannot obtain a mortgage within the agreed timeframe, they can opt out of the purchase.
How long can a house be contingent?
The duration a house remains in a contingent status can vary widely, typically hinging on the specific terms outlined in the purchase agreement. A contingency period can be as brief as a week, or as long as three months, depending on the nature of the contingencies and the agreement between buyer and seller. The most extended periods typically relate to mortgage and home sale contingencies.
Inspection contingency: This type usually allows a period for the buyer to conduct inspections and potentially negotiate repairs. While specific timeframes can vary, a common period for inspection contingencies is around 7 to 10 days, though this can depend on the agreement between the buyer and seller.
Appraisal contingency: The appraisal contingency period often ranges from 7 to 20 days. This period allows time for a home to be appraised to ensure it’s valued at or above the sale price, which is crucial for securing a mortgage.
Financing (mortgage) contingency: Mortgage contingencies, providing the buyer time to secure financing, typically have a period set between 30 to 60 days. This timeframe reflects the complexity and importance of obtaining mortgage approval for the transaction to proceed.
Home sale contingency: This type of contingency, where the purchase depends on the buyer selling their current home, can vary widely in duration, from 30 to 90 days. It is designed to offer buyers the flexibility to sell an existing property before completing the purchase of a new one.
If all other conditions have been met except the mortgage contingency, the seller and their listing agent may feel confident enough about the sale to move the listing from “contingent” to “pending.” If the buyer is offering an all-cash purchase, the listing may never be labeled as contingent.
