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  • Writer's pictureLoi Huynh

Precisely Does "Contingent" Imply In The Real Estate Industry?

Real Estate Agent in Houston
Contingency in Real Estate Industry

You undoubtedly spend much time perusing real estate listings if you're in the market for a new home. Home listings marked as "contingent" may appear throughout your search. I take that they are no longer for sale, then? Keep reading to find out what "contingent listings" are and whether you should raise your hopes about them.

In Real Estate, What Does "Contingent" Mean?

Contingent often refers to anything that is "dependent on certain conditions." As used in the real estate industry, this phrase indicates that the sale's closing is conditional on satisfying specific terms outlined in the contract. The seller has accepted an offer but wants to keep the listing open until all contingencies are satisfied.

The sale will go through if and only if all of the terms and conditions set out in the contract are satisfied. On the other hand, if a problem arises, one of the parties to the agreement may be able to terminate it. As a result, a home listed as "contingent" but later removed from the market could become available for purchase once again.

What Are Some Typical Real Estate Contingencies?

Considering the potentially life-changing sums of money at stake in real estate deals, all parties naturally wish to avoid any unpleasant shocks down the road. Both parties may negotiate for safeguards against unforeseen events by including such provisions in the agreement. Some of the more famous examples are as follows:


If the buyer needs a mortgage to finance the purchase, an appraisal contingency will almost always be included in the offer. Mortgage providers often order house valuations to ensure the collateral adequately backs the loan amount they are issuing. An underappreciated property might result in a lender requiring a larger down payment or perhaps a rejection of the loan application. The buyer may cancel the purchase agreement under the appraisal contingency if the house appraises for less than the loan amount.


A title contingency is another often used and crucial stipulation for purchasers. If the purchaser discovers, through a title search, that the seller does not have clear title to the property or that there are liens against the property that could affect the purchaser's ownership rights following the purchase, the purchaser is permitted to withdraw from the agreement to purchase.

Pre-Purchase Property Evaluation

Buyers may get a professional look at the house they want to buy by including an inspection contingency in the contract. This information helps alert prospective buyers to any issues that may arise and allows them to budget accordingly.

A sum up to which the buyer is prepared to repair the house may be specified in the contingency. They may be able to cancel the deal if, for instance, the estimated cost of repairs is more than $10,000. Homebuyers in competitive markets may choose to forego the inspection contingency. But this is the norm in most cases.


There is always the potential that a buyer's financing may fall through, even if they have been preapproved for a loan. Mortgage contingencies protect buyers if they cannot get the funding despite making all reasonable efforts.

Sale of a House

The buyer may intend to utilize the money they get from selling their current house to fund their next home purchase. Buyers in this circumstance may make their offer contingent on the timely sale of their current residence by including that provision in the language of their request.

Brand-New Buildings

When it comes time to move on from their existing residence, sellers also need a new place to call home. If the seller hasn't located a new place to live by a specific date but accepts an offer, they may pull out of the deal.

Example of a Contingency

In the case of real estate, here is an example of a contingency: Someone offers to purchase your house for $400,000, with a down payment of $80,000. The appraisal and the inspection are contingent upon the property appraising for at least the purchase price, and the buyer is responsible for any repairs beyond $15,000. In other words, the offer has been accepted, and the contract has been signed.

All that's required for the contract to go through is an appraisal of $400,000 and a clean home inspection. If the place is estimated at less than $400,000 or the examination reveals repairs costing more than $15,000, the buyer may cancel or renegotiate the purchase agreement.

Things to consider in a Potential Home

There are several sorts of contingencies in real estate, each with its responsibilities and prerequisites. Finding out what kind of contingency it is might provide light on whether or not the deal will go through to close. Since the North Carolina real estate market is unlike any other, it is improbable that a house-tagged contingent would fail to complete.

Once both parties agree upon a contract, the only party that can back out at that point is the buyer. There is no alternative offer that the seller may take at this time. A contract falling through, though, is not unheard of.

Before placing an offer on a property, most buyers will be preapproved for a mortgage from a mortgage lender. It allows them to learn whether or not they can get a mortgage. Even if the buyer has been preapproved for a mortgage, it doesn't guarantee that the information they gave is accurate.

The mortgage contingency is a common reason buyers back out of a purchase. A pre-approval letter may be useless if the buyer provides false information about their assets, income, or whether or not they have paid their taxes for the past year. Most people may be approved for a mortgage now because of low-interest rates, but whenever the market changes or rates start to climb, many more contingent contracts will be voided.

When the buyer has a signed contract on their present house and scheduled closing date, this is known as a "contingency." Because the home or property is not formally sold until closing, the buyer is safeguarded if the transaction falls through. Due to contractual restrictions, the seller cannot consider alternative bids on the property during the contingency period.



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