With real estate inventories on the rise, there’s never been a better time to hunt for the perfect home. Along the way, remember the wisdom of Greek philosopher Heraclitus, who famously coined the phrase, “Change is the only constant in life.” That’s because when you’re buying a house, things come up. One of those things is a contingent house listing, and if you can stay nimble, it won’t get the better of you. 

In this article, you will learn about a contingent house listing including the good, bad and ugly. Contingencies are quite common in real estate, and they are nothing to fear. In fact, a contingent house listing can work in your favor if you understand its ins and outs. 

What Is a Contingent House Listing?

A contingent house listing means that things are on track for you to have the keys to the front door in your hand. Before that happens, however, certain conditions must be met to have a done deal. In real estate, these conditions are known as contingencies. Even though you’ve submitted an offer and the seller has green-lighted it, contingencies are the one thing that can stand in the way of signing on the dotted line. 

So, what does contingent mean on a house listing exactly? 

Think of it as an asterisk on a real estate deal that could make or break the outcome. For the real estate contract to be legally binding, whatever contingencies are listed must first be achieved. The buyer and seller must each agree and sign off on these conditions beforehand. 

As an example, one common type of contingency has to do with price. Let’s say you have offered to pay the listing price but only if the home inspection does come back to haunt you with major fixes on a money pit. In this situation, you and the seller have agreed on a price, but the contract is contingent on the home inspection. The fate of the deal rests in the hands of these results, and both you and the seller know it. 

Common Types of Contingencies in Real Estate 

The fact is that there are numerous scenarios that could emerge on a house listed as contingent. Let’s explore some of the most common types. 

Appraisal Contingency 

An appraisal contingency is one that is designed to protect the buyer from paying more than a house is worth. This contingency also protects the lender from footing too much cash. 

It is a caveat that requires the appraisal on the property to come in at the agreed-upon sale price or higher. Otherwise, the contract is not worth its weight in paper, and it will become null and void. The house listed as contingent could allow for the seller to lower the sticker price to the true value. 

Inspection Contingency 

The inspection contingency also looks out for the buyer, so they know if there are any gremlins hidden beneath the surface. It gives the buyer a period to call in the pros and have the home inspected to ensure they won’t have their house flooded the first time it rains, for instance. 

The inspection could uncover anything from a leaky faucet to a failing roof. Depending on what the home inspection finds, the seller might be given the opportunity to make any necessary repairs that are of concern to the buyer. Otherwise, based on the inspection contingency, the deal could be off the table. 

Mortgage Contingency 

A mortgage contingency provides the buyer with a reasonable amount of time to get a mortgage so that they can afford the home. 

If that condition is not met within the specified period, the buyer can walk away — no harm, no foul. As for the seller, they’ll have to go through the process all over again to find a qualified buyer. 

Title Contingency 

A title contingency gives the buyer the opportunity to ensure that the seller is the rightful owner of the house. 

Sometimes, even through no fault of the seller, there might be issues tied to the status of the title that must be addressed before the closing can legally occur. For example, the title search might uncover outstanding liens on the property from a prior owner that could otherwise throw a wrench into the deal. 

Home Sale Contingency 

When a house is listed as contingent, chances are it might have something to do with a home sale. This type of contingency is once again looking out for the buyer and their ability to get out of their current home so they can get into the new one. 

The home sale contingency sets a date by which the buyer must sell their current home so they can afford the mortgage on the new one. If that deal falls through, the buyer is off the hook from the contract to buy the new home.  

Difference Between Pending vs. Contingent 

Chances are you have driven by a home with a real estate sign that says, “Deal Pending.” Make no mistake about it, this is not the same thing as a house listed as contingent. 

A pending status lets the world know that a deal is in the works and it’s too late to join the auction. A buyer has submitted a deal that is up to snuff, the seller has accepted it and contingencies were accomplished. 

On the other hand, a contingent status is less impermeable. It means that the seller could keep the status of the listing as “active.” If the contingencies are not met, the deal falls through. 

This will make it easier for the seller to begin accepting bids again if necessary. Savvy buyers could also submit an offer on a contingent listing. This increases their chances of rising to the top of the heap if the initial buyer’s contingencies crumble. 

Pros and Cons of Buying a House Listed as Contingent

If you are thinking of putting an offer on a house listed as contingent, consider the pros and cons. 

On one hand, you could be the hero that rescues the seller from a buyer that was too much trouble. This means that once their deal falls through and your offer is accepted, you could be on your way to signing on the dotted line sooner than you otherwise would. 

In addition, you might not have to fend off as many competing bids since you were astute enough to submit an offer while the house had a contingent status attached. 

On the downside, since you are not the first one to the negotiating table, you might have to raise the stakes with a higher offer to capture the seller’s attention. Also, you are taking a risk that the contingencies in place with the first buyer will fail. If that doesn’t happen, you’ve wasted time that you could have spent finding your real new home. 

Looking for a Mortgage? Explore Digital Mortgage Options from Ratecloud

With all the uncertainties that come along with a contingent house listing, you’ll probably want to make the mortgage process as painless as possible. 

For the tech-savvy, this is where RateCloud’s digital mortgage options come into play. Not only does the automated process save time and money, but RateCloud will hook you up with competitively low rates that they are able to find as a result. 

Get started on your digital mortgage application today!