What Does Contingent Mean in Real Estate?
We’ll get you up to speed on contingencies and help you navigate your best course of action when you receive a contingent offer on your home.
You’ve been browsing for a home when suddenly a particular listing catches your eye. It’s a lovely four-bedroom Colonial, beautifully presented in the heart of a mature neighborhood. But as your eyes scan the details of the listing, you come across a term that makes you pause: “Contingent.” So, what does contingent mean in real estate?
A property listed as “contingent” in real estate means the seller has accepted an offer, but the deal isn’t fully closed yet. The final sale hangs in the balance, waiting for certain conditions or “contingencies” to be met. These conditions can be anything from the buyer securing a mortgage, the home inspection clearing, or the sale of the buyer’s current home.
Until those contingencies are cleared, the house isn’t officially sold. So in this context, “contingent” is a bit like saying, “Hold on, we’re working things out!”
Step one: Talk to a few buyer’s agents!
Tell us a little bit about your plans (where you’re looking to buy and when you want to make a purchase) and we’ll connect you with top-rated buyer’s agents in your area. It takes only a few minutes, and it’s free.
Are contingencies common in real estate?
Many real estate contracts contain contingencies. It’s also true that most real estate contracts, even those with contingencies, end up closing. As of November 2024, only 6% of real estate contracts were terminated. So, if you’re buying a house and see a listing that’s contingent, it’s likely going to be fully off the market soon. If you receive a contingent offer as a seller, statistically speaking, that deal is likely to still close.
That said, contingencies in a real estate contract do create some uncertainty.
“All the way until the very last day before we close on your house, the buyer can cancel. 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 11% more sales than the average agent in Ventura, CA.
What are the most common contingencies?
Here are the four most common contingencies in real estate contracts:
Inspection contingency
Buyers often want a home inspection to protect their interest — they want to lift the hood of the car so to speak before they commit to buying. Buyers can also use the home inspection report as leverage to negotiate a better deal, asking you to complete repairs or offer repair credits. If you refuse and you can’t come to an agreement, they’re free to walk away.
Appraisal contingency
It’s standard for lenders to require a home appraisal to ensure they aren’t lending more than the property’s fair market value. With an appraisal contingency, your home must appraise for an equal or higher value than the buyer’s offer for the sale to close. If the appraisal comes in low, you’ll need to negotiate a lower sale price, ask if the buyer can make up the difference in cash, or challenge the first appraisal if there’s reason to believe it was flawed.
