Real estate contracts often contain conditions, known as contingencies, that must be fulfilled before the deal can close. These conditions can prove challenging to fulfill and may ultimately result in deals failing. There are some differences about contingent vs pending.
Despite these issues, home sales do go through and only about 7% of contracts fail in any given year.
Contingent listings are more likely to fall through
When a home is listed as contingent, it means there are still certain conditions that must be fulfilled before the deal can close. These could include getting approved for a mortgage, getting an appraisal or other issues that need to be taken care of prior to closing.
When certain conditions aren’t fulfilled, the buyer has the option to withdraw without losing their earnest money deposit. Unfortunately, this could cause a delay in the sale process or even lead to cancellation of the agreement altogether.
Homes that remain contingent will allow other buyers to place offers if the conditions agreed upon are fulfilled. This is known as a continue to show contingency, and it gives sellers peace of mind that their original buyer won’t fulfill requested provisions.
Contingent listings are more likely to be withdrawn
When a home is listed as contingent, it means the owner has accepted an offer and the sale of the house will depend on certain conditions being fulfilled. These may include mortgage approval, appraisals, title searches and other requirements.
These conditions can be challenging to fulfill, and a home sale may fail if one or more of the contingencies isn’t satisfied. If either buyer or seller must withdraw from the purchase, they typically receive their earnest money back.
Real estate transactions often involve contingent offers. That is why it’s so important to exercise caution when making an offer on a home that has conditions attached.
Contingent listings often disappear because they don’t sell as quickly as other homes on the market. If you think a property is an excellent deal and you like it, make sure you get in before it gets taken down.
Contingent listings are more likely to be rejected
The Multiple Listing Service (MLS) classifies homes as contingent when there is a condition or “contingency” that must be fulfilled before the sale can close. These conditions include things like home inspections, title searches and financing arrangements.
Buyers frequently add contingencies to their offers in order to guarantee they can get their earnest money back if something goes awry during the home-buying process. Examples of contingencies include not meeting mortgage requirements, failing to have the house appraised at an adequate value, and more.
Contingent listings are more likely to be rejected than pending ones due to the conditions that must be fulfilled for a deal to proceed.
In a competitive seller’s market, buyers who make contingent offers may face rejection if they appear too aggressive or demanding. To avoid this outcome, buyers should make their offer carefully and only add contingencies when absolutely necessary.
Contingent listings are more likely to be accepted
A contingent listing is one that has been signed but includes a condition, such as home inspections. If the buyer must fulfill these conditions in order for the deal to close, contingent listings become active again.
When a listing is contingent, it’s not uncommon for sellers to accept backup offers. This can be beneficial to buyers who may be undecided or wish to make an even better offer.
The buyer must conduct their due diligence on the property and fulfill any other contingencies included in the contract, such as financing or a title search.
Once these conditions are fulfilled, the status changes to pending.
Pending listings have a higher likelihood of acceptance than contingent ones, although most sales do close successfully. Unfortunately, deals can still fall through for various reasons.