What Does Active Contingent Mean?

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Are you one of those people who’s constantly browsing online real estate listings? At some point, you might have come across a property listed as active contingent. Here’s a look at what that means for your home search.

What does an active contingent status mean?

Active contingent is one of the many status updates given to a property listing. If a property has an active contingent status, it means the seller has accepted an offer from a buyer. However, the home sale isn’t finalized yet because certain contingencies need to be met.

What does a pending status mean?

On the flip side, you may see a property listed as pending instead. A pending status means that the seller has accepted an offer, and all of its contingencies have been satisfied, addressed, or waived. The home will remain in pending status until all the paperwork is processed and the deal officially closes.

Keep in mind that pending real estate sales aren’t active listings. So what’s the point of a pending status then? This label gives listing agents a way to let other agents know what’s happening with the sale and leaves a window of opportunity if the deal somehow falls through.

What are common contingencies in real estate?

Let’s dive into the contingencies you may find in a real estate contract. Home buyers often add contingencies to their offer in order to protect themselves if something goes wrong during the sale. More specifically, these contingencies allow the buyer to back out of the contract under specific conditions without losing their earnest money deposit. There are a few different types of contingencies in real estate:

Financing contingency

A financing contingency, also known as a loan contingency, means that if the buyer has trouble getting a mortgage for the home purchase, they can drop out of the contract with no penalty.

Home sale contingency

A home sale contingency lets existing homeowners make an offer on a new home that’s contingent on selling their old house. That way, they can avoid overlapping housing costs.

Inspection contingency

An inspection contingency gives buyers the ability to negotiate repairs or cancel the contract based on the results of a home inspection.

Appraisal contingency

An appraisal contingency states that if the appraised value of the home is lower than the purchase price, the buyer can negotiate the purchase price or walk away at no cost.

Can you make an offer on active contingent properties?

Let’s say you fall in love with a house, only to find out that it’s active contingent. Can a home buyer make an offer on an active contingent listing? Some real estate agents say it can’t hurt. And as long as the seller’s agent isn’t explicitly refusing offers, then it’s fair game to make an offer.

After all, if the contingency period doesn’t go smoothly, the seller may need to entertain other offers. However, keep in mind that most active contingent listings do eventually sell to their original buyer, so it’s important not to get your hopes too high.

The bottom line

Contingencies present a sort of dilemma. While they help buyers avoid surprises during their home purchase, they can also make a buyer’s offer less competitive. That’s because sellers may avoid contingent bids since there’s a chance the sale could fall through at the last minute.

So is it possible for buyers to avoid contingencies with no downside? If you work with Orchard, you can get many of the benefits of a non-contingent offer. For current homeowners looking to buy their next home, we help you make a strong, competitive offer without a home sale contingency.

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