The phrase "contingent status" in real estate refers to a home currently on the market that has a purchase contract in place with contingencies that must be met before the sale is completed. Implications of contingent contracts affect property sellers, buyers and others potentially interested in the home.
A contingency is an exception to a promise, commitment or contract. In a real estate purchase contract, buyers often include contingencies to give themselves a way out if a few particular and high-impacting events do or do not take place before the sale is finalized. Property purchases are rarely refundable or exchangeable, so buyers want to get it right. A seller may accept contingencies if he feels the opportunity to make the sale outweighs the risk of giving the buyer contingencies.
Contingencies are fairly common in purchase offers. Making a purchase contingent on the sale of your own house, obtaining financing and getting a satisfactory appraisal on the property are among the more commonly accepted buyer contingencies. Many buyers try to purchase new property before the sale is completed on their existing property, and they do not want to owe two mortgages at once. If you cannot get financing, which may relate to an appraisal below the offer price, you cannot pay for the home. Normal and appropriate contingencies are good protective measures for buyers. Trivial and unnecessary contingency requests may alienate the seller.
Sellers would virtually always prefer clean contracts with no contingencies. This happens sometimes. However, as the seller, you have to weigh the risks of limiting your appeal to other buyers and the potential time frame when accepting contingencies. You can include a kick-out clause in a contingent contract that gives the buyer 24 to 48 hours to accept a modified contract if you receive a noncontingent and acceptable offer. Some sellers will take a slightly lower purchase price to avoid contingencies.
Potential Buyer Impact
Some buyers' agents steer their clients away from considering homes with contingent contracts. Especially in markets with many available homes, they feel the time and hassle involved in looking at properties under contract is not worth the lower chances of getting the home. However, if a seller has been in contingent status for months waiting for the buyer's home to sell and has a kick-out clause, he may have more interest in agreeing to a reasonable offer. Plus, many contingent contracts expire if contingencies are not met by a certain point.