In real estate, the term “contingent” refers to a condition that must be met before a real estate transaction can be completed. A contingent offer means that the sale of a property is dependent on certain conditions being met.
For example, a buyer may make a contingent offer on a property that is subject to the sale of their current home. If the buyer is unable to sell their current home, the sale of the property they are interested in will not proceed.
Contingent offers are used to protect the buyer or the seller in a real estate transaction. For example, a buyer may want to make their offer contingent on a satisfactory home inspection, or a seller may want to make the sale of the property contingent on the buyer obtaining financing.
It is important to understand the terms of a contingent offer and the consequences if the conditions are not met. It is also important to have a clear and detailed agreement in place between the buyer and seller to ensure that both parties understand the terms of the transaction.
What’s the difference between contingent and pending?
“Contingent” and “pending” are two terms used to describe the status of a real estate transaction. The terms are similar, but there is a difference between them.
A property is considered “contingent” when an offer has been accepted by the seller, but certain conditions must be met before the sale can be completed. These conditions may include the buyer selling their current home, obtaining financing, or having a successful home inspection.
Once all of the contingencies have been met and the sale is ready to proceed, the status of the property changes to “pending.” This means that the sale is in the process of being finalized and the closing date has been scheduled.
In short, a property is considered “contingent” when conditions must still be met before the sale can be completed, and “pending” when the sale is in the process of being finalized. These terms are important to understand because they give buyers and sellers an idea of where the transaction stands and what steps need to be taken before the sale can be completed.
Which contingencies can be included in the purchase agreement?
Here are some of the most common contingencies that can be included in a purchase agreement:
Financing Contingency: This contingency requires the buyer to obtain financing in order for the sale to proceed. If the buyer is unable to secure financing, the sale may be cancelled without penalty to either party.
Home Inspection Contingency: This contingency allows the buyer to have a professional inspection of the property to identify any issues or defects. If the inspection reveals problems that the buyer is unwilling to accept, the sale may be cancelled.
Appraisal Contingency: This contingency requires that the property be appraised for a certain value in order for the sale to proceed. If the property is appraised for less than the agreed-upon price, the buyer may renegotiate the price or cancel the sale.
Sale of Current Home Contingency: This contingency requires the buyer to sell their current home before the sale of the new property can proceed. This protects the buyer from having to carry two mortgages.
Title Contingency: This contingency requires that the title of the property be clear and free of any liens or encumbrances before the sale can proceed.
Insurance Contingency: This contingency requires that the buyer obtain insurance on the property before the sale can be completed.
Zoning Contingency: This contingency requires that the property be zoned for the intended use before the sale can proceed.
These are just a few of the most common contingencies that can be included in a purchase agreement. The specific contingencies included in a purchase agreement will depend on the individual circumstances of the transaction. It’s important to have a clear and detailed agreement in place between the buyer and seller to ensure that both parties understand the terms of the transaction.