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Is it Possible to Buy a Contingent House?

By Bill Gassett | November 10, 2021

Is Buying a Contingent Home Possible?

It can take a long time to find your perfect home, but just when you think your search is over, you might discover that it is listed as a contingent house. So can you still offer on a contingent home, or have you missed the chance to buy your perfect property?

If you want to know what contingent means in real estate, we have the answers. Let's look at whether it makes sense to put in an offer on an already contingent home.

What Does Contingent Mean in Real Estate?

Listed homes for sale are classified in different ways to help you understand how far along in the sales process they are. If you see a home listed as “active,” this means it is for sale with the sellers considering bids from potential buyers.

When a home is listed as “pending,” the contingencies have been met, and it is moving towards the closing date. When the house is marked as “sold,” it is no longer on the market.

A “contingent” listing also means that the seller has accepted an offer, but some things still need to be completed on the way to closing. Contingencies are a frequent requirement in a home purchase contract and must be met for the transaction to progress.

So that you don't miss out on a home you would really love to buy, you need to understand your options if you find a contingent or active under-contract home.

Keep in mind that when you see a home shown as contingent on or Zillow, it means the seller has accepted an offer. In order to purchase the property, the contract with the existing buyer will need to be terminated.

Offer on Contingent Home
Can I Still Buy a Contingent Property?

Will the Contingent Home Sale Fail?

Home sales at the contingent stage can fall apart for many reasons. The buyer losing their job has been a more common cause of deals falling through in recent years, but there are many other reasons why the home might return to the market.

There are many common contingencies in a buyer's real estate contract, leading to a failed home sale. Here is a review of some of them.

Home Inspection Discoveries

A home inspection contingency is a standard clause to protect the buyer should the home inspection discover problems. Perhaps serious issues were found with the structure of the building, or if repairs were required, the buyer and the seller could not agree on who would pay the costs.

Also, if the home inspection report reveals serious problems, it may not be possible to secure the home loan expected. It's also possible there could be un-permitted work that is clearly building code violations.

The home inspection protects the buyer from making a purchasing mistake. It is always wise to have a home inspection checklist to follow to ensure you don't end up with a lemon.

Selling The Buyer’s Home

Many home buyers will need to sell their current property to have the funds available to buy the next one. This type of contingency is essential to help home buyers avoid needing to have two mortgages simultaneously.

Sometimes the buyer of a home will have difficulty in selling their property. This leaves the seller in an awkward position. The seller will be left wondering when the buyer’s home will sell, which could be weeks or months away.

The contingencies contained within the contract need to spell out how long the buyer has to sell their home; otherwise, the seller will be looking to accept another offer from someone else.

Financing Isn't Guaranteed

Mortgages aren't fully approved until closing. Whether the buyer has been preapproved, problems can occur that mean the financing doesn't get final approval as expected.

Approval for a mortgage involves a deeper look at the finances of the borrower. The lender could discover unexpected debts or exaggerated assets, and if this happens, the lender may refuse the mortgage.

If any of these problems happen, the home could be back on the market with the seller looking for a new buyer.

Low Appraisals

When a lender is required to provide the funds to purchase a home, they usually require a house appraisal. This involves a professional appraiser visiting the seller’s property to assess the fair market value.

Should the appraiser conclude that the home is worth less than expected, the house could return to the market. The lender will not loan on offers that are more than the home is worth.

So, if the buyer has made an offer above the market value, they will have to make up the difference or reach an agreement with the seller. If neither of these things happens, the seller will be looking for a new buyer, and the sale could fall through.

Making an Offer on a Contingent House

It can certainly be worth your time putting an offer on a home that is already contingent. Even though you may not buy the house, it puts you in the first position to make an offer should things fall apart with a previous buyer.

If you choose to make an offer on a contingent home, many things will be similar to a typical offer, but there are differences. There are a few different possible outcomes, these include:

Your offer is accepted. If the seller is unhappy with their current buyer and can switch to another buyer, they might move forward with you.

You get no response. This will happen if the seller expects to close with the buyer and is happy with the situation.

The other possibility is that they like your offer and will want to discuss it further. However, if they do not have a get-out clause, they may not be able to take your bid even if they want to.

Is it Really Worth Making an Offer on a Contingent Home?

While you can buy the home still, is it worth your time bothering with a property that has a contingent offer?

Let's look at the pros and cons.

Pros of Making an Offer

* If the seller wants another buyer, you could get to closing a lot faster than you would through a typical sale.
* If the sale has fallen apart, you'll face less competition than you would with other homes.

Cons of Making an Offer

* While there is a chance you will be able to buy the home, it's a relatively long shot, so be prepared for disappointment.
* You may need to offer more money to encourage the seller to go with you.

Final Thoughts

If you've found the perfect home, but it is contingent, you can still make an offer. You need to be aware that you'll need to move quickly if the seller decides to go with your offer, but there is also a greater chance of disappointment.

Hopefully, you now have a much better understanding of contingent in real estate and can proceed accordingly.

Bill Gassett is an authority in the real estate industry with 38 years of experience. Bill is well respected for his informative articles for buyers, sellers, and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, the National Association of Realtors, Inman News, Newsbreak, Credit Sesame, Realty Biz News, and his own authoritative resource, Maximum Real Estate Exposure. He has been on of the top RE/MAX agents in New England over the last two decades.
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