Contingency Offers Explained

I’m seeing a good amount of houses listed as Active Contingent in the marketplace, and I get questions all the time from buyers and sellers who are trying to better understand how they work. As we move into the slower part of the year & the market cools off a bit, we should start seeing even more of them.

What does Active Contingent Mean if you’re a buyer?

Say you think you’ve found the perfect house online, but it’s listed as Active Contingent. A lot of buyers will instantly think it’s unavailable and won’t go look at the house. But this isn’t entirely true. Active Contingent generally means that the seller has accepted an offer, but it has a contingency. The most common contingency is that the buyer must sell their house first before they can buy this one.

If the house you want to see is listed as Active Contingent, your agent should call the listing agent for the property and find out as many details about the contingency as the listing agent will divulge. The most important piece of info is what stage of the contingency they are in… it could be that they are only a couple days away from closing on the house they need to sell first and everything is looking pretty solid. Or on the flip side, they may have just listed their house and it’s not under contract yet. In the latter case, the seller of the house you like will most likely still be marketing the property and looking for stronger offers.


What happens if you want to offer on a property that already has a contingent offer?

If you submit an offer to the seller, and they want to take it, they will then give their current buyer notice that they are accepting another offer unless they waive their contingency. The buyer may decide to waive their contingency, meaning they want to move forward with the purchase even if their house doesn’t sell (if they can obtain financing) OR they are willing to risk their earnest money if they have to back out at the last minute. The buyer usually has 3 or so days to decide if they want to wave the contingency, but this is negotiable at the time the contract is written.

What does accepting a Contingent Offer mean if you’re a seller?

It really depends on the offer and each case is different. You’re agent will find out where their house is, is it currently listed, and if not, are they going to price it either at or below market value to hopefully get a quick offer. How strong is the offer you have? If it’s not that great and you have a lot of other interest in your house, it might be better to hold out. If it’s a great offer and the interest has been dying down, then you may be enticed by the contingent offer. Or maybe the buyer already has their house under contract and it’s thru the option period, but they still want to structure their offer as a contingency just as an added safety net.

What if you’re the buyer wanting to put a contingent offer on a property? 

A seller accepting your contingent offer all depends on the market, how much interest they’ve had in the house, how strong an offer you make & the situation with your contingency. If the house you’re selling is in a very hot area that sells quickly, and they haven’t had much interest or offers on their house, then it’s more likely the seller will work with you. If you’re buying in a super hot area where multiple offer situations are common, and you must sell your home first, you may consider going ahead and selling your house before offering with a contingent offer or at least getting it on the market, under contract & thru option period. That way you can come to the table with the strongest offer, and not deal with the frustration of losing out on a lot of houses. You can always rent for a short time while you find the new house.

BOTTOM LINE: Contingencies  happen a lot and do have a high success rate if handled properly. Negotiating and working with contingencies can be tricky so it’s important to find an agent who has experience with contingencies, knows the nuances & can guide you thru the process. 25% of the total transactions I’ve done this year have been with contingencies, and each one made it to the closing table!


Feel free to email me any questions you have regarding contingencies or anything else – [email protected]

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