“Contingent” and “contingency” have related but distinct meanings in real estate:
- Contingent: This term typically describes the status or condition of a real estate deal. For example, when a property listing is marked as contingent, it means that an offer has been accepted but the sale is not finalized because certain conditions must still be met.
- Contingency: This refers to the specific conditions or requirements that must be satisfied for the contract to proceed. For instance, a financing contingency means the buyer must secure a mortgage, and an inspection contingency means the buyer can request repairs based on the inspection results.
In short, “contingent” describes the state of a contract, while “contingency” refers to the actual conditions that affect that state
What happens if I am looking for a home and see a listing that is contingent? Can I still place an offer?
Yes–you can still toss your hat in the ring for a home listed as contingent! Here’s some terms to understand. (If you choose to conduct your home search with an agent, they are a great resource to break this down as well).
- Contingent status: So, the seller has an accepted offer, but they’re still tying up loose ends with contingencies—think inspections, financing, or whatever else is on the checklist. The deal isn’t sealed yet.
- Backup offer: Your offer will be considered a backup. If the current buyer stumbles—maybe their financing falls through or the inspection reveals a hidden gremlin—the seller might just turn to you.
- Seller’s mindset: Keep in mind, the seller’s likely focused on their current buyer, so they might not be in a rush to entertain other offers. But hey, if your offer is solid or the seller senses some trouble in paradise with the current deal, they might reconsider.
- Stay in the loop: If you’re really keen on that property, keep an eye on its status. Touch base with your agent to see how things are progressing. If the existing buyer starts hitting roadblocks, you want to be ready.
- Be ready to roll: If the seller does bite and accepts your offer, be prepared to move fast. You might need to tweak your terms or closing timeline to make your offer more appealing.
What types of contingencies could be involved in a home offer?
| Contingency type | Description |
| Financing contingency | Your offer depends on securing a mortgage. If financing falls through, you can back out without losing earnest money. |
| Inspection contingency | Allows for a professional inspection. If major issues are found (e.g., leaks, mold), you can request repairs or withdraw your offer. |
| Appraisal contingency | Protects against overpaying. If the appraisal comes in lower than your offer, you can renegotiate or back out. |
| Sale of current home | Your offer hinges on selling your current home first, avoiding juggling two mortgages. |
| Title contingency | Ensures the title is clean. You can back out if there are liens or ownership disputes. |
| HOA review | Allows for a review of Homeowners Association rules and fees before proceeding, avoiding surprise costs or restrictions. |
| Home warranty contingency | Requests a warranty that covers repairs for a certain period after closing, providing peace of mind. |
| Contingency for repairs | Asks the seller to complete specific repairs before closing, ensuring the home is in good condition when you take ownership. |
Does contingent in mortgage have the same or different meaning than in real estate?
In the context of mortgages, “contingent” carries a similar meaning as it does in real estate offers. When it comes to mortgages, “contingent” refers to conditions that must be met for the loan to proceed. Here are some specific examples:
- Loan approval contingencies: Before a mortgage lender fully approves your loan, they may set contingencies based on:
- Income verification: The lender will require proof of your income (like pay stubs or tax returns). If your income doesn’t meet their criteria, the loan could be denied.
- Employment status: If you change jobs or lose your job during the mortgage process, it could jeopardize your loan approval.
- Credit approval: The lender will check your credit score and history. If there are negative changes, like new debts or missed payments, it could affect your ability to secure the loan.
- Property condition: Lenders may require certain conditions about the property itself, such as:
- Appraisal value: The home must appraise for at least the amount of the loan. If it appraises for less, the lender may refuse to fund the loan.
- Property insurance: Proof of insurance may be required, and the coverage must meet the lender’s standards.
- Title and legal issues: The lender may require a clear title before finalizing the mortgage. If there are liens or ownership disputes, this could prevent the mortgage from going through.
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.