Published April 18, 2024.
Written by Reno Perry.

1. What Does Contingent Mean?

In simple terms, "contingent" in real estate refers to a condition or requirement that must be fulfilled before a contract or agreement becomes legally binding. Picture it as a safety net for both buyers and sellers, making sure that certain crucial conditions are met before sealing the deal.

Did you know? The Merriam-Webster definition of “contingent” is: dependent on or conditioned by something else.

2. Types of Contingencies

Contingencies come in various forms, each serving a specific purpose in the real estate transaction process. Here are some common types:

• Home Inspection Contingency: This allows the buyer to conduct a professional home inspection within a specified time frame.

• Financing Contingency: The purchase hinges on the buyer securing financing from a lender.

• Appraisal Contingency: This stipulates that the property must be appraised for at least the agreed-upon purchase price.

• Sale of Existing Home Contingency: For buyers needing to sell their current home first, the offer on the new property is contingent upon the successful sale of their existing home.

• Title Contingency: This allows the buyer to back out if issues with the property's title are discovered during the title search.

3. How Contingencies Work as a Seller

When a listing indicates that it's contingent, it means the seller has a condition to fulfill before closing escrow. Typically, this involves the seller finding a replacement home and entering into escrow themselves. The goal is to ensure that the seller isn't left without a place to go after selling their current property.

4. How Contingencies Work as a Buyer

For buyers, a contingent offer means their purchase is dependent on certain conditions, such as selling their existing home. To make a competitive offer, buyers often need to have their house already in escrow, demonstrating their readiness to proceed with the purchase. Buyer contingencies can also detail repairs or inspections that need to be done prior to finalization.

Final Thoughts

Contingencies serve as safeguards in real estate transactions, providing protection and flexibility for both buyers and sellers. However, it's essential to strike a balance and avoid excessive contingencies that could push away sellers. By understanding contingent offers and sales, you can navigate the real estate market in Southern California with confidence.

Our team at Century 21 Marty Rodriguez has been handling contingent offers since 1978. We’ve seen it all, and are here to help. Remember, having an experienced real estate agent by your side can make all the difference when dealing with contingencies and making sure you have a smooth transaction process.

If you have any questions or need assistance with your real estate journey, don't hesitate to reach out for questions big and small. Below, we have a Q&A box so we could possibly cover your question for our future articles as well. Happy house hunting!