Money and Mortgage, Home Sellers
What You Should Know About Contingent Offers
The most important thing sellers can do when accepting contingent offers is have a good real estate agent by their side to explain what this offer means. First, let’s define contingency; A contingent house listing means that an offer on a new home has been made and the seller has accepted it. But, before the final sale can advance, criteria needs to be met. These contingencies are clauses in the sales contract, which can include the appraisal, home inspection, and mortgage approval.
Contingent Offers vs. Pending Offers
A home that has a contingent offer is still technically active, meaning the seller can receive other offers. Alternatively, a pending offer means that the home can no longer hold showings for other prospective purchasers.
Types of Contingencies
If the seller is willing to accept the contingent offer, they can either take the property off the market or write a kick-out clause into the sales contract. Contingent houses can exist under different types of statuses that qualify them as contingent. The multiple listing service (MLS) uses different terminology when describing contingent statuses. Here are a few types of contingencies you should understand before accepting an offer:
Mortgage Contingency
A buyer may choose to include a mortgage contingency clause that enables the buyer to break the contract without losing their deposit.
Home Sale Contingency
A buyer who is reliant on the funds from the sale of their current home to purchase a new one may opt to include a home sale contingency clause in their offer. This contingency provides a buyer with a specific period of time to sell their home. They are also free to withdraw their offer and recover their deposit without consequences.
Home Inspection Contingency
After making an offer, it’s customary to conduct a home inspection. Sometimes, a home inspection can reveal serious issues with the property that may affect the buyer’s desire to purchase the home or willingness to pay the price initially offered. With a home inspection contingency, buyers can void the sales contract, renegotiate the offer, or walk away.
Appraisal Contingency
An appraisal contingency protects the buyer from purchasing a home that is appraised at the same price or higher than the purchasing price. This ensures that the lender is not lending the buyer more money than a home is worth.
Contingent - Continue to Show
If the seller accepts an offer, but there are multiple contingencies they must address, other buyers can continue to visit the listing. Additionally, they can submit offers while the original buyer is working to complete the contingencies.
Contingent - No Show
Once the seller accepts an offer with contingencies, they will no longer show the house or accept other offers. Once the buyer addresses the contingencies, the status of the home will be pending.
Contingent - With Kick Out
This means that there is a deadline for the buyer to meet their contingencies. The seller can continue showing the home and accepting bids during this time.
Contingent - With No Kick Out
This status means that there is no deadline for the buyer to meet their contingencies and if a higher offer is made on the house, the seller cannot accept it.
Short Sale Contingency
This occurs when a seller is willing to accept less than the amount still owed on the property’s mortgage. This lets other agents know that the home is no longer for sale, but this does not mean that the sale has been approved.
Contingent Probate
This is common when dealing with an estate after death. This means that the lawyer receives a portion of the estate in payment for completing the process.
Can I Still Make an Offer on a Contingent House?
Yes, on some occasions. Check which contingency has been put into place and if the sellers are still accepting offers. Contingency offers can be complex and require the help of a real estate professional. If you love a contingency house, do not lose hope as it is possible to call the home yours if you take the right steps.
If you have any questions regarding contingent offers, contact HomeHunt today. We understand how confusing this process can be and are here to help you buy the home of your dreams!