Contingent sales mean that the owners have accepted the offer, but certain things still need to be done to the property for the sale to finalize.
Jump to insightA home is pending when all the contingencies have been met, but the sale isn’t complete yet.
Jump to insightIf you’re a buyer, you can still make an offer on contingent or pending homes, depending on what’s happening with the property sale.
Jump to insightWhat does it mean if a property is contingent?
Real estate agent Richard Harless of the Phoenix, Arizona, area says that a contingent home is "one on which the owners have accepted an offer but are waiting to clear the deal based on some conditions or contingencies."
If these contingencies are not met, the offer is revoked, and the house typically goes on the market again. "If you are a buyer and you see a home that is contingent … it means you may still have a chance," Kirlew said.
Common contingencies typically relate to the condition of the property or various financial thresholds needing to be met for a buyer to execute their end of the deal. Here’s a list of common contingencies:
- Inspection contingency: The home sale hinges on the results of a professional home inspection. If the property has hidden issues or the needed repairs are too costly, a buyer may choose to walk away from the sale.
- Appraisal contingency: An appraiser has the ability to change the outcome of the sale. If a home's value isn't as high as the buyer or seller believed, the amount of financing the buyer is approved for may be insufficient.
- Financing contingency: This contingency is put in place when a buyer does not yet have financing lined up to purchase the home. If the buyer fails to line up a mortgage or other financing by a specific date, the sale could fall through.
- Buyer selling their existing home first contingency: In many cases, a buyer needs to sell their existing home in order to purchase a new one. If they don't sell their home by a specific date to meet the contingency in the contract, the transaction may be terminated.
What are the different contingency statuses?
Knowing the different contingency statuses can help you determine what’s going on in the buying or selling of your home. Harless says there are six main contingency statuses to know about, and they all dictate what might happen next as part of the home sale process.
Short-sale contingent
Short-sale contingent is used to describe a situation when a seller accepts an offer that is lower than what they owe to their lender, usually seen in cases of urgent relocation or financial distress, Harless says.
That said, the lender has to agree to a short sale for this type of transaction to proceed, and the entire process can take more time as a result.
"This can be pretty complicated, since the lenders also get involved in sale proceedings," said Harless.
» MORE: What is a short sale?
Contingent: continue to show
This type of contingency allows sellers to continue to show their home to other prospective buyers while the original buyer takes steps to meet all contingencies outlined in the home contract.
"Sellers can accept offers from other buyers if the first one fails to come through," said Harless.
Contingent: no show
This type of contingency denies the seller the chance to continue showing their home to other prospective buyers while the original buyer works toward meeting contingencies in their contract. Harless says this status is commonly used for contracts where it is likely the buyer will meet contingencies, or there are few requirements to meet in the first place.
Contingent: no kick-out clause
This contingency status gives buyers unlimited time to meet contingencies in their contract without losing out on the home sale.
Contingent with a kick-out clause
Contingencies with a kick-out clause give the buyer a certain length of time in order to meet contingencies outlined in the contract. After an agreed-upon timeline has passed, sellers can pull out of the deal and put the property back on the market.
Contingent probate
Harless says this contingency status occurs after the death of the owner, during which the probate process works to divide or manage the deceased's house and property.
What does it mean if a property is pending?
Pending homes are in the process of being sold to someone, meaning that all contingencies have been met and the sale is in process. However, Harless says this still doesn't mean the sale is complete because a number of things can still lead to the deal falling through.
As an example, a pending home sale could fall apart if the buyer's financing falls through or if there are appraisal issues that complicate the home sale and make financing an issue.
If you are a seller, you want to get to pending as soon as possible because this means you are on the road to completing your sale, says Kirlew.
How properties move from contingent to pending
Homes typically move from contingent to pending when all the agreed-upon contingencies in the contract have been satisfied. These may include completing a home inspection, securing financing, finalizing an appraisal or selling a previous home.
Once the buyer has met these conditions and the seller has agreed that all terms are fulfilled, the transaction advances into the pending stage. At this point, the property is effectively off the market, and both parties work toward closing. Title checks, final walk-throughs, and document preparation often take place during this time.
It's important for both buyers and sellers to stay on top of deadlines and communicate clearly to ensure a smooth transition from contingent to pending status.
What are the different pending statuses?
When a home is pending sale, real estate agents and other professionals in the industry use different pending statuses to describe what is going on with a property.
Pending: taking backups
A home that is listed as pending taking backups is currently moving toward closing, yet the seller is still accepting offers from other buyers.
Pending: more than four months
A home that has been pending for more than four months will be automatically listed that way in a multiple listing service (MLS).
Pending short sale
Pending short sale means the property is being sold during a short sale process, and contingencies have been met, but the property has yet to make it to closing.
Can you make offers on pending and contingent properties?
As a buyer, you can still make an offer on contingent and pending properties, but it might be harder, depending on the status.
You can make an offer on a contingent or pending home, but it may only be feasible in certain scenarios. For example, a home that is listed as "contingent no show" would be impossible to view while contingencies are being met, so it would be difficult to determine whether you want to make an offer or how much you want to offer.
Making an offer on a contingent property: Harless says it is easier to make an offer on contingent houses because if the status is a "kick-out" or "continue to show," you will be able to view the listing and make a higher bid.
Making an offer on a pending property: With pending houses, however, offers are only entertained if the previous buyer fails to come through. At that point, your best shot is being a backup offer with financing already lined up, says Harless.
» MORE: How much to offer on a house
FAQ
What is better, contingent or pending?
The short answer is that it depends. If you’re a seller, you’ll likely want your home to be pending, since it means major contingencies have been met, and you’re closer to closing on the property.
Prospective buyers might want a home to be in contingency status. "But if you're someone who's been beaten to an offer by someone else, you will prefer a contingent status, since it means you have a higher chance of getting a bid in since it is technically still an active listing," said Harless.
How often do contingent offers fall through?
According to a recent study from the National Association of Realtors, 6% of terminated contracts were due to contract contingencies in March 2022.
How do I make a backup offer to a seller?
If you want to make an offer on a home that is already contingent, the real estate professional you're working with should be finding out what the current offer is and if you can match or outbid them "because this is the most likely scenario when your backup offer will stand," said Harless.
Generally speaking, you would have your agent write up an offer just as you would on any other property. Kirlew adds that the only difference is you would have to wait to see how the contingencies work out before you know if you have a shot at closing the sale.
If you're hoping to make an offer on a home that is already pending, this situation can be trickier, since the sale is closer to completion. Ultimately, you should lean on the advice of your real estate professional in this case. They may be able to reach out to the seller's agent to see if they are in a position to consider other offers or if they believe they will be in the future.
How long do contingent and pending statuses last?
The length of time a home stays in contingent or pending status can vary widely depending on the terms of the contract and how quickly the buyer and seller can meet required conditions.
A contingent status might last anywhere from a few days to a few weeks, depending on how long it takes to satisfy inspection, financing or other contingencies. Some contracts include specific deadlines for these milestones, while others are more flexible.
Pending status typically lasts until the closing date, which is usually 30 to 60 days after the offer is accepted. However, delays in financing, title issues or required repairs can extend this timeline.
Bottom line
Now that you know the difference between pending versus contingent home sales, you're in a much better position to shop for a home and a mortgage. From here, you could decide to skip over homes that are already under contract in order to avoid the inevitable heartache that occurs when you miss out on a home you really want. However, you could also move toward swooping up a home that may be on the verge of being back on the market because of unmet contingencies or other issues with the sale.
In either case, your best bet is getting approved for home financing with the top mortgage lenders upfront so you can show sellers you are qualified to buy.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- National Association of Realtors, “March 2022 Realtors Confidence Index Survey.” Accessed November 19, 2022.
- Consumer Financial Protection Bureau (CFPB), “What is a short sale?” Accessed November 27, 2022.
