Are you looking at a real estate listing and confused by the term “contingent”? It can be a confusing word, so let’s look at what it means and how it applies to real estate listings.
What Is Contingent?
Contingent is a term used to describe an agreement or offer which is in pending status – the details of the agreement have been negotiated, but it is not yet a legally binding contract. In the context of real estate, this means that the homebuyer and seller have agreed to terms, but the sale is contingent upon some other event happening.
When it comes to real estate listings, the term “contingent” typically implies one of two things:
- Inspection Contingency: The sale of the house is contingent upon it passing a home inspection.
- Financing Contingency: The sale if the house is contingent upon the buyer receiving loan approval from the bank.
In either case, these contingencies are typically time-limited and need to be resolved within a certain amount of days. If the contingencies are resolved, the sale will be finalized. If one of the contingencies is not resolved, the party who cannot resolve it may back out of the sale.
In short, if you see the word “contingent” on a real estate listing, it means that the buyer and seller have agreed to terms, but the sale of the house is contingent upon some other event. It is not yet a legally binding contract.