Imagine this scenario: you’re scouring the listings of homes for sale in Meridian Idaho when you chance upon the property of your dreams. There’s plenty of space for your garden and for the children to play in. It’s in a well-gated community and is close to public amenities.
Then, you learn from an agent that the house is currently “contingent.” Your mind starts reeling. What does it mean?
In this article, that’s what you’re going to find out.
What is contingent real estate?
Many homes for sale, enter into a market listing, a database that agents, brokers, and buyers refer to when looking for properties to buy and sell.
A house, meanwhile, goes through many phases until it is officially off the market and a buyer moves in. One of these stages is contingency.
In real estate, contingency refers to a phase wherein a seller accepts the offer of a buyer but both parties must meet certain provisions to close a deal. Until then, the property remains an active listing and there’s always a possibility that either or both the buyer and seller will fall out of a contract.
How is it different from pending real estate?
The term is often compared to “pending” since it tends to have similar meanings. Pending real estate also implies the seller accepts the buyer’s offer. The biggest difference is in the listing.
Contingency real estate remains active while pending ones are not. After all, it is under the assumption that all possible contingencies or conditions have already been met.
Further, in contingency, the possibility of the agreement or deal falling through is high. Keeping the listing active helps ensure that other potential buyers have the opportunity to snag the property.
Common Types of Contingencies
An appraisal is a process of assessing the value of an asset at a particular period. Only a certified appraiser can perform this based on multiple factors for consideration. These include location, condition of the property, and overall market data.
If the property value goes down after a home appraisal, the buyer has the option to negotiate the price or to not proceed with the sale.
While homes in Idaho are more affordable than properties in other states, homebuyers may still need to apply for a mortgage to spread the cost.
These days, potential property owners can obtain a mortgage from private lenders and government-backed options such as VHA loans and FHA loans. Regardless of which buyers choose, these lenders will have requirements.
If the buyer fails to apply for a mortgage or the lender rejects the application, the seller may opt-out.
3. Failure to Match Other Offers
Sellers can receive multiple offers, giving them the prerogative to demand a buyer to match them. If the latter fails to do so, a seller now has the chance to opt-out from the agreement.
4. Repairs and Maintenance
A buyer may choose to go through contingency if the property they like needs repairs or upgrades. They can identify these during an inspection.
The seller then has to make the necessary changes. Otherwise, a buyer can choose to let go of the property and find something else to buy.
Can you buy a contingent real estate property?
Homebuyers can still offer for a home as long as the deal is not yet closed. It will be to your best interest to check out a property you want to buy before it’s marked as contingent, however.
Clearing contingencies can take time. If you obsess over a contingent property, you may miss out on a chance of buying a better home or one with a better offer.
If you can, avoid contingent properties, especially if you’re eager to move in.
Look for homes for sale in Meridian, Idaho, with the help of a real estate team such as Sweet Group Realty who can keep you updated on active listings.
No doubt, some contingent properties are worth fighting for, but it also pays to keep your mind and heart open to other possibilities. If you need more information about contingencies, don't hesitate to reach out and contact us.