Starting in the real estate industry is not an easy thing to do. There are a lot of words to learn, numbers to understand, and things to consider. But we don’t want you to feel overwhelmed! From now on, each week, we’ll provide you with accurate but straightforward definitions of the most common terms that can cross your path. And today’s word is “contingent.”
There’s always that moment of happiness when you finally find the ideal home for your clients, the one that has everything they dreamed of –price included–. But sometimes, the exhilaration keeps you from seeing a tiny but essential detail: the status is contingent. Wait, what? What does that mean? Why is it still listed? Is it too late?
Well, though it’s not strictly late, you’re certainly not the first in line. The word “contingent” means the property owner has accepted an offer, but it comes with contingencies or conditions that have to be met before the sale goes through.
Common types of contingencies
Contingencies are there for a reason: to mitigate the risk. Both homeowners and buyers will negotiate the conditions to what the agreement is subjected to. Among the most common contingencies we can find:
- wait for a home inspection report;
- confirm buyer’s financing;
- complete sale of buyer’s current home;
- assess the appraisal price.
It’s important to keep in mind that the more contingencies a buyer wants, the less attractive their offer is, especially when purchasing a property in a competitive market. Thus the smart move is to try to include only the vital ones.
If everything turns out ok, it’s time to move forward with the sale and the status changes to “pending” (more on that next week!). If not, then the contract is off without penalty or loss of earnest money to both parties. The property goes back to the market, and that’s the queue you’ve been waiting for.
What to do if a property has a “contingent” status
As we said before, everything is not lost (yet). It’s entirely plausible that a party can’t meet some of the requirements. For instance, it’s possible that the buyer can’t sell his property or that the home inspection report doesn’t turn out that well. In fact, there are different types of contingent statuses to take into account, such as:
- Contingent – Continue to show: potential buyers can still see the property and place offers.
- Contingent – No show/Without kick-out: the buyer stops showing his property.
- Contingent – Release/Kick-out: the seller keeps showing the property (and accepting additional bids), and the buyer has a deadline to settle the conditions.
As you can see, depending on the status, you still have a chance to get the place. If the house is worth it, though it’s not wise to put all eggs in one basket, here are some ideas to try. The first is to write an offer letter to the buyer, explaining why your buyer is perfect for the property, and maybe even make an offer without contingencies (or with as few conditions as possible). Yeah, it’s quite a risky move, isn’t it?. The second one is to keep looking for other properties but set an alert on this one, just in case it hits the market again. You certainly wouldn’t want to miss it twice!