What does contingent mean in real estate?

A common prospective home buyer experience is to finally lock eyes with your dream home on a real estate website, only to find a bullet point or label that says “contingent.” As a potential home buyer, you should understand what contingent means in real estate and how that 10-letter word can affect your chances of buying a house.

Making an offer on a contingent house is different than making a contingent offer on a home. Both actions are essentially two sides of the same coin. Understanding the nuances between them can help you understand contingencies – no matter which side you’re on.

Let’s dive into contingent’s meaning in real estate for contingent houses and offers. We’ll also explore common buyer contingencies, types of contingent listings and more.

What does contingent mean?

The basic definition of contingent is that something depends on certain conditions. In a real estate transaction, when a home is listed as contingent, it means a homeowner has accepted a potential home buyer’s offer, but the buyer must meet additional contingencies (conditions) before finalizing the sale. Buyers and sellers must resolve all contingencies before they meet at the closing table.

Can you make an offer on a contingent property? Definitely. Is it as easy as buying a home from a seller who hasn’t accepted an offer yet? Definitely not.

When a house is in contingent status, that means there’s a potential buyer who put in a contingent offer. A contingent offer is an accepted bid from a potential buyer that must fulfill certain conditions. If the conditions aren’t satisfied, the buyer can back out of the sale and get their earnest money deposit back.

Common buyer contingencies

Contingencies allow buyers to get out of a contract without repercussions and help protect them against many risks. Contingency clauses can vary from state to state, but some are common throughout the country.

Below are a few common contingencies a buyer may include when they make an offer on a house.  

• Mortgage contingency: A mortgage contingency, or financing contingency, is a clause in a purchase agreement that indicates the offer depends on the buyer securing financing to purchase the home. Its primary purpose is to protect the buyer and seller by giving a buyer time to obtain financing.
• Home inspection contingency: An inspection contingency gives a buyer the right to have a professional inspector inspect the inside and outside of the home. The clause protects buyers by allowing them to negotiate repairs, request an additional inspection or back out of the deal if the inspection uncovers significant defects.
• Home appraisal contingency: The appraisal contingency ensures a property is valued at least up to the agreed purchase price. This clause protects the buyer from overpaying for a property. In most cases, the seller will typically refund the earnest money deposit if the agreement is terminated because of a low appraisal.
• Home sale contingency: A home sale contingency clause is included in a sales contract when a buyer must sell or settle their current home to finance their new home. The contingency will indicate a buyer’s time frame to sell their home. If the buyer sells during that time, the contract can move forward.
• Title contingency: A title contingency provision is added to make sure there aren’t any issues with a property’s title. Any easements or liens found on the house may delay the sale.

Types of contingent listings

If you come across a property listed as “contingent,” you should know that different types of contingencies may be involved. And the type of contingency you encounter can provide valuable clues into whether or not you should make an offer.

Here are a few contingency types you may see:

Contingent – continue to show (CCS)

If a home's status is “Contingent – Continue to Show,” the seller has accepted an offer, but several contingencies are pending. The seller may be eager to see if other “less contingent” offers come in or the prospective buyer’s offer is “shaky” and has the potential to fall through. If a property’s status is CSS, it may be worthwhile to submit an offer with fewer contingencies.

Contingent – no show

This designation indicates a solid offer on the property that’s likely to make it to the closing table. As a result, the seller no longer wants to show the property to other prospective buyers. This scenario is about as good as it gets for the current buyer and seller. For an interested buyer who still wants to make an offer, not so much.

Contingent – with kick-out clause

This status allows a seller to accept an offer from a new buyer. If this happens, the seller essentially “kicks out” the first buyer. That may be good for the seller and the new potential buyer, but it’s bad news for the buyer with the contingent offer.

Contingent – with no kick-out clause

This means the seller can’t accept another buyer's offer unless the current buyer can’t meet the conditions of their offer. This provision protects the current buyer because they can't be “kicked out” unless they don't meet the contingencies. It’s not so good for the seller if they’d prefer to move on to another offer. It’s also not good for any buyer trying to bring a competing offer to the table.

Short sale contingent

A short sale is a real estate transaction where a lender accepts less than the amount owed on a mortgage. Despite its name, a short sale can be a lengthy process. Short sale contingent means the seller has accepted at least one short sale offer on the property, but the agent is still listing it to get backup offers.

For the seller, it's a good insurance policy if the current deal falls through. For the current buyer, it won’t have any effect unless they can’t meet the contingencies (usually financing). And for the new buyer waiting to buy a short sale home, it typically means a lot more waiting.

Contingent probate

A home is sold in probate court when someone dies and doesn’t leave their property to a beneficiary. When that happens, the state takes over and administers the property's sale. The process is similar to a short sale in terms of length, and the likelihood of getting another offer considered is slim to none.

Pending vs. contingent meanings

A pending property status means a house is under contract and in the process of closing, and the seller isn’t accepting additional offers. A contingent status means a seller is open to other offers in case the buyer can’t meet the offer’s contingencies. A house stays in pending status until all documentation is completed and processed and the sale closes.

The pending designation can vary depending on the details of the sale. Here are a few of the most common types:

• Pending – taking backup offers: If a seller has accepted an offer and some issues come up in the final stages of the sale, they may accept backup offers.
• Pending – short sale: When an accepted offer is a short sale, the mortgage lender or other financial institution must approve the deal. A short sale is outside of a buyer’s or seller’s control.
• Pending – more than 4 months: This indicates an accepted offer has been pending for more than 4 months, which may be caused by delayed construction, ongoing negotiations or longer-than-average processing times.

Can you still make an offer on a house that’s contingent?

Yes, you can make an offer at any stage of the home buying process. You can put an offer in on a contingent home until the house is listed as sold. Putting in an offer doesn’t guarantee you’ll be the one closing on the home. But it can position you as a solid backup option if the contract falls through. Making an offer on a contingent home is relatively the same as making an offer on an active listing.

But consider the pros and cons before you make an offer on a contingent home.

Pros of making an offer on a contingent house

If a home is listed as contingent, it means the house is under contract. However, your real estate agent can do some research to determine what the contingencies are. That insight can help you decide whether to submit a backup offer in case something goes wrong with the current buyer.

If it’s your dream home, it may be worthwhile to submit a backup offer. But if the home is pending – dream home or not – the seller may not be able to accept your offer until the first deal falls through.

Cons of making an offer on a contingent house

If you submit an offer on a contingent home, it’s important to remember that your offer may not be accepted. If the current buyer’s offer falls through and your backup offer is accepted, be prepared with intel on the property’s background.

For example, if the offer fell through because of the inspection, you should be prepared for that possibility. Adding contingencies to an offer can protect you from being tied to a contract that doesn’t serve you or your interests.

Contingent meaning in real estate: FAQs

Learning the meaning of contingent in real estate may raise some more questions for you. Here are our answers to some frequently asked questions about contingent houses and offers.

What are some tips for submitting an offer on a contingent listing?

Consider using these tips if you want to make an offer on a contingent house:

• Work with a real estate agent: An experienced real estate agent can help you gain insight into a contingent property. This valuable information and an agent’s expertise and judgment can help you make an informed decision about making an offer.
• Be persistent, not pushy: A pushy potential buyer may turn off a seller from considering their offer even if the current buyer’s offer falls through. Make yourself available to the seller. Respond to calls and emails promptly to demonstrate your seriousness. But persuade, don’t push, the seller.

Is it common for contingent offers to fall through?

A recent study by the National Association of REALTORS® (NAR) found that only 6% of real estate contracts were terminated in July 2022. So it’s fair to assume that most contingent home purchase agreements are successful, and most contingent offers don’t fall through.

Should I make an offer without contingencies?

You can make a no-contingency offer, but it may increase the risk for you and the seller. A sale can always fall through. You may lose your earnest money deposit if you waive contingencies and walk away from the sale.

However, in seller’s markets, a no-contingency offer can give you an advantage over other buyers with contingencies in their offers. Talk with your real estate agent before deciding whether withholding contingencies is right for you.

The bottom line: Understand a contingent house’s meaning before making an offer

Unless a property is “the one,” it may be best to stick to making offers on homes that don’t have a contingent or pending status to save you the time and frustration of waiting for an offer to fall through. But if it’s your dream home listed as pending or contingent, put your best offer forward. You may still have a chance.

Before making an offer on a contingent house, make sure you’re approved. Apply for mortgage approval with Rocket Mortgage^® today.