What is The Time Frame a Home Will Stay Contingent?
Are you wondering how long a house will stay contingent?
When you set out to find your dream home, you may be “a day late and a dollar short.” It is not unusual for buyers to find a house they love that someone else has already scooped up.
You might find some properties listed as contingent when looking for your new home. But what does contingent mean, and can you still make an offer on the house?
If you like a contingent home, making an offer might still be possible. It is essential to understand that not every home that becomes contingent will make it to closing. While it is true that the property is under contract, many contingent sales fall through due to contingencies in an accepted offer.
One of the more popular questions I’ve received over the many years of selling real estate is how long will a house stay contingent?
We will examine what you need to know about the contingent status of a home.
What is the Meaning of Contingent?
The contingent status of the listing indicates the seller has agreed to an offer from a buyer. Though they will have signed a purchase contract, there are still some things to do before the home has a new owner.
There will be contingencies that need to be completed before the sale can close. Once all the real estate contingencies in a contract have been satisfied, the listing agent will change the listing status from contingent to pending. See the difference between contingent vs. pending to get a better understanding.
Many different contingencies can be applied to the contract, but there are some common ones you should know about:
Inspection Contingency
So that the buyer knows the home isn’t a money pit, the home inspection contingency lets them have the house professionally checked. If the inspector finds problems with the home, the buyer can walk away if they can’t agree with the seller.
A home inspection contingency typically lasts seven to ten days from when the offer is executed.
Appraisal Contingency
Lenders want to ensure they aren’t loaning more to the borrower than the home is worth. When there is an appraisal contingency in the contract, and the appraisal comes in lower than the buyer’s offer, the buyer can walk away without losing their earnest money deposit if an agreement can’t be reached.
In real estate circles, this is what’s referred to as an appraisal gap.
Home Sale Contingency
When buyers already own a home, they’ll probably need to sell it to fund their new purchase. Occasionally potential buyers will attempt to add language to an offer that says the purchase will be contingent on selling their existing home. It’s what’s called a home sale contingency. The contingency will give the buyer time to sell their home, or the deal will be off.
Usually, a buyer will be given between 30-90 days to get their home under contract.
Home sale contingencies are frowned upon, especially in seller’s markets, because the house is not guaranteed to be sold. Sellers lose control over the process of selling their homes with this contingency. A seller does not know if the buyer’s home will be priced or marketed correctly.
Mortgage Contingency
While buyers should already have been preapproved for the loan they need, sometimes things happen that will prevent final approval from the lender. If their loan application fails, they must either find a new lender or back out of the deal.
With this contingency, they can walk away with their earnest money returned if they are not approved for the loan they need. The mortgage contingency is the most common clause in a contingent contract. Most home purchasers are not able to pay cash and need a loan.
Are Contingent and Pending Listings the Same?
Though contingent and pending are frequently confused, they are not the same. A pending listing means that all the contingencies have been completed, with the buyer and the seller just waiting for the closing date.
See what pending means in real estate for a complete understanding.
How Long Will a Listing Remain Contingent?
Typically a home will remain contingent for between 15 and 90 days. The purchase agreement will set the timeline for the contingencies to be completed.
The contingent period depends on what contingencies are required. For example, if there is only an inspection contingency, the time a home remains contingent will be very short. On the other hand, the property could stay in contingent status for much longer if all the contingencies mentioned above are in the contract.
When there is a home sale contingency, the time a property remains contingent will likely be the longest. In some circumstances, when only a mortgage contingency remains, the listing agent may decide to change the listing from contingent to pending.
Agents will do this because they are confident the sale will not fall through. In that case, the time a home is in contingent status will be less. It could be as few as a few weeks.
For a cash buyer with no contingencies, a real estate agent could immediately mark a property pending and skip the contingent status altogether.
Key Takeaway: In my experience as a real estate agent for the past thirty-seven years, the time a property remains contingent is highly variable from transaction to transaction. It depends on the circumstances, the listing agent, and the local real estate market.
Will The Contingent Sale I Love Fall Apart?
Another question that real estate agents get asked is how often contingent sales fall through. There are a myriad of reasons that real estate transactions fail to close. The two most common are home inspection problems and a buyer not getting a mortgage.
Unfortunately, most of the time, real estate transactions stay together for buyers that miss out on their dream homes.
Is it Possible to Make an Offer on a Home Listed as Contingent?
It might be possible in some situations, depending on the purchase agreement. There might be one of the following contingencies showing statuses:
Contingent Continue to Show
Contingent but continue to show. This allows sellers to continue to show their homes until closing. This allows the seller to have backup offers accepted if the buyer cannot meet all the contingencies.
Contingent No Showings
Contingency no-show. This means that the house will not be available to be shown to other buyers for a period of between 30 and 90 days, depending on the agreed-upon closing date. The average time to close on a house is 45-60 days, but it could be shorter or longer.
Contingency With a Kick-Out Clause
Contingency with a kick-out clause. This lets the seller show their home and accept another offer while the buyer tries to complete the contingencies. This protects the seller should the buyer’s home take longer to sell than expected or if their financing doesn’t work out.
If the seller gets a better offer, they can give the first buyer time to complete the contingencies or drop them and close.
Can You Buy or Sell a Home Without Contingencies?
In a seller’s market, when there are a lot of buyers around, there is often pressure on buyers to reduce or altogether remove all their contingencies. Doing this increases the chance that the buyer’s offer will favor the seller, but it is risky.
Sellers can also avoid contingencies by selling their homes to investors like iBuyers. Though this can speed up the selling process, it probably means they will not sell their home for as much as they otherwise could if they have gone down the traditional route.
In a buyer’s market, contingencies are the norm, not the exception. Unless there is a bidding war on a house, real estate contingencies are a traditional part of most transactions.
It becomes essential for buyers and sellers to understand the local real estate environment when making and accepting contingencies.
Final Thoughts on The Length of Time in Contingent Status
In every sale, the time a home remains contingent can differ. While there are some accepted norms, contingencies and decisions by real estate agents can change the time a home remains contingent.
If you want to buy a contingent home, ask your agent to check the status with the listing agent. It’s possible the sale could be shaky and return to the market.
About the author: The above Real Estate information about how long a house stays contingent was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for 37+ years.
Are you thinking of selling your home? I am passionate about Real Estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
Very informative, Bill.