Eager to learn more about buying or selling a home or real estate in general? The Tina Barletta Team is here to help! We’ve got a one-of-a-kind Real Estate Basic Training designed to clarify the more mysterious or confusing aspects of real estate. Our second session of BT continues with Lesson 2: Understanding Contingency. Are you ready to learn?
What Exactly Is Contingency?
One of the most confusing terms in real estate is “contingent”. What exactly does it mean if a home is listed as “contingent” or if a buyer makes an offer with a specific contingency?
The short answer is that it means an offer has been accepted by the seller, but that the sale is dependent upon some specific criteria (also called a “contingency”) outlined by the buyer.
Note: The process of the buyer checking to make sure this criteria has been met is also called “due diligence”, and it was the topic of our first basic training!
What criteria might make a home contingent?
Some of the most common contingencies in real estate are a home inspection (to ensure there aren’t any big maintenance issues), an appraisal (to make sure the home is worth as much as the mortgage provided by the lender), and a financial contingency (to ensure the buyer can actually obtain a mortgage).
Until recently, a buyer could purchase a home contingent on selling their current home—but in North Carolina, that no longer exists!
Other types of contingencies
Depending on the contract agreed upon by the buyer and the seller, the seller may be able to decline or accept another offer, should something better come along. This might be referred to as a “First Right” contingency (a better offer comes along) or a “Kick Out” (if the buyer doesn’t meet their deadlines for their contingencies).
Can homes be shown while they’re contingent?
For the most part, yes, they can. However, this is again dependent on the type of contingencies set forth in the contract, as well as the willingness of the seller to continue to show their home.
What happens after due diligence?
Once the due diligence process is complete and all contingencies have been cleared up, the sale will move from a contingent to a pending status. Pending signifies that both buyer and seller are ready to move forward and the sale has progressed into the stage where more of the legal work is completed and approved.
Pending still doesn’t mean final, though!
Though a sale marked as pending has gone through (and passed) a lot of checkpoints, it’s never a done deal until closing day! That’s why some pending sales may have specifications, like “taking backups”.
Can you make an offer on a contingent home?
While this might not be the ideal stage at which to make an offer, it’s definitely still possible. If the sale falls through, you’ll likely be first in line as a backup offer. However, if you want to increase your odds of beating out the current buyer, you’ve got to make your offer more appealing than theirs.
Either way, it pays to have a real estate agent who knows what they’re doing and can help you make an offer that can compete against any other potential offers.
Need More Information About Contingencies in JoCo?
Real estate is different from state to state, county to county, and at times, even town to town. If you want more information about contingent sales in your specific area, it’s always best to ask a local agent!
Buying or selling in Johnston County, NC? The Tina Barletta Team is here to help! Contact us today to learn more about how we can help you find the perfect home in just the right spot… or list your current home for top dollar.