Reply
Contributor
freogirl
Posts: 14
Registered: ‎04-19-2009
0

What does "contingent" really mean?

I've always thought that when a property goes from Active to Contingent that means there is a contract and it's off the market for all intents and purposes, but comments on a previous thread made me think otherwise.  When a property goes from "active" to "contingent", what does that really mean? In other words, can you still see those homes and/or make offers on them?

 

Thanks!

Visitor
scholes
Posts: 1
Registered: ‎04-27-2009

Re: What does "contingent" really mean?

Contingent means that there is a contract on the home, but there is some condition in the contract that allows the buyer or seller to back out if that contingency is not met.  Most of the time the contract is "contingent" upon financing or attorney review or inspection, and in these cases the house is essentially off the market and the seller will no longer show the home to other potential buyer. 

 

However, the buyer may have a contingency that gives them the option to back out if they don't sell their current home within a certain amount of time.  Most times the seller retains the right to continue to show the home to other potential buyers, but those other buyers are aware of the contingency and they know they have to make a better offer than the current offer.  This "better" offer may be a higher price or may simply be offering a contract without a contingency of selling their home.  If the seller wants to accept this "better" offer, they need to contact the original contingent buyer and give them the option of removing their contingency or forfeiting their contract.  If they remove their contingency, they are essentially saying that they will close on the home without first selling their current home, which is only really possible for a cash buyer with the funds to own 2 homes or someone with the means to get a mortgage on a second home, both of which are unlikely in this economy and mortgage climate.  In fact, in this market, contracts contingent on selling your current home are not very common because most sellers realize the difficulty in selling your home these days and they dont want to accept a contract where the buyer is unlikely to sell their current home quickly, especially since the contingency may discourage other potential buyers from taking a look at the home.  Therefore, most of the contingencies you will see these days are for financing, inspection, attorney review, etc and therefore those homes are not available for showings unless the contract falls through.  Your real estate agent or the listing real estate agent of the home can find out the nature of the contingency if you find a contingent home in which you are interested.

Regular Visitor
Oakland
Posts: 9
Registered: ‎03-02-2009
0

Re: What does "contingent" really mean?

[ Edited ]
Sounds like a good answer above. A house that I've just tendered my earnest money for after negotiating the selling price now has a contingency status today (which took over the weekend to change having  signed the contract with the earnest deposit on Friday) and is contingent on the home inspection and attorney review which has to happen within five business days of Friday. The property cannot be shown or open to other offers during this time to the best of my understanding. It is not contingent on the sale of my current house because trying to coordinate the two in this market seems close to impossible. If it was the above response details what options are available. If you have been looking at a property (hopefully not the one that  I hope to be mine) contact the listing agent and find out what type of contingency the pending contract has.
Message Edited by Oakland on 04-27-2009 09:09 PM
Visitor
broker
Posts: 1
Registered: ‎04-28-2009
0

Re: What does "contingent" really mean?

Real estate agents will frequently enter an MLS listing as contingent. This means that an offer has been presented and accepted. Contingencies(attorney review, inspection, mortgage approval) have to be met to set up a firm closing. Some Realtors do not show contingent properties; others do. It is in the best interests of the client to show the contingent property in case the contract to purchase falls thru.

 

Always ask to see a contingent property, especially in this market.

Contributor
freogirl
Posts: 14
Registered: ‎04-19-2009
0

Re: What does "contingent" really mean?

These answers have all been really helpful.  It sounds like you might be able to see the house still if it is contingent, but you wouldn't be able to make a successful counter-offer unless the contract between the seller and the buyer falls through first. 

 

A couple more questions just so I'm totally clear: Can you legally find out what the contingencies are on the contract - or even the price they contracted for before closing?  Do homes go from "contingent" back to "active" if the contract falls through because the buyer doesn't get financing, attorney approval, etc.?

Regular Contributor
Elle_Chicago
Posts: 55
Registered: ‎03-31-2009
0

Re: What does "contingent" really mean?

It is illegal in any state to disclose contractual information between the parties of the seller and buyer if you are not an authorized party involved directly with the contingency.  Hence, there is no way to keep a status on the negotiating contract or find out exactly "what" the contingencies are.  There could be several.  The home will remain in contingent status until one of 2 things happens.  The current contract proposal is declared void, or a successful transation on close date, in which it will be removed from the mls listing.  I'm not an agent, just a consumer, but this has been my experience with 'contingent' listings.

 

Also, contingent homes that are still able to be shown usually mean one of two things.  First, the selling agent wants and is hoping for a backup contract in case the first falls through or is declared void by either party [due to finance falling through or a lack of interest for whatever reason from the buyer, or whatever reason-honesly there are a million of them].  The second reason a contingent property would still be allowed to be shown, is that the selling agent knows the current contract is not looking good. 

 

All of this information is out the window however on short sale and foreclosures because those negotiations can take months to close.  So the property looks perpetually 'contingent'.  My only and best advice to you would be to keep shopping.  The ONLY reason I know all of this, is because it just happened to me first hand within the last 3 months.  I've lost 3 houses because I wasted time putting in a contract on contingent homes that were already sitting and bid on in the market, but weren't updated in status yet.

 

Good luck

 

p.s. the home does return to active if something happens and the current contract falls through [provided the selling party wishes to continue attempting to sell the property].

Regular Visitor
Oakland
Posts: 9
Registered: ‎03-02-2009
0

Re: What does "contingent" really mean?

[ Edited ]

I've just noticed that Redfin includes information on the contingency status - at least on the property that I have a contract on. It says exactly what the contingencies are so it can't be all that illegal as stated in the above response.

 

Listing Information
  • Possession: Closing
  • Contingency: Attorney Approval/Home Inspection
  • Holds Earnest Money: Yes
  • Sale Terms: Conventional
  • Sale Terms: FHA
  • Sale Terms: VA

Here's another contingent listing that indicates a financing contingency
 
Listing Information
  • Possession: Closing
  • Possession: Immediate
  • Contingency: Financing
  • Holds Earnest Money: Yes
  • Sale Terms: Conventional
  • Sale Terms: FHA
 

 

Message Edited by Oakland on 05-02-2009 09:15 AM
Message Edited by Oakland on 05-02-2009 09:15 AM
Contributor
freogirl
Posts: 14
Registered: ‎04-19-2009
0

Re: What does "contingent" really mean?

Hi Oakland,

 

Where was that info posted on Redfin? Was it in the home details when you click "View Details"?  I just chose a home that recently went contingent and I can't see any difference in the listing than "active" turning to "contingent".  Really interesting!

Regular Visitor
Oakland
Posts: 9
Registered: ‎03-02-2009
0

Re: What does "contingent" really mean?

[ Edited ]

Usually at the bottom of one of the columns of information under "listing information".

 

Try doing a "Crtl F" key command to search the page and type  "listing" in the search entry if you can't find it.

 

You do have to be registered at Redfin to see the additional information. I was just checking the listings at work and the listing information was not available until I signed in. 
Message Edited by Oakland on 05-04-2009 01:37 PM
Contributor
BradWalbrun
Posts: 36
Registered: ‎04-08-2009
0

Re: What does "contingent" really mean?

The over-simplified answer is that it's not yet a "done deal", so you could put in an offer and they can keep you as a back up, or possibly sell it to you if you offered more or were paying cash, depending on if there was an "out" for the seller.