You’ve probably noticed the property market has a language of its own. There’s many phrases that are not typical in everyday language.
One word to cause confusion is “contingent”.
If you’re house-hunting, you may well have seen sale signboards with the word “contingent” plastered across them.
So, what does that mean? Well, first, let’s be clear on what it doesn’t mean – it does not mean the home has been bought. In fact, the house is still for sale.
Contingent means that a prospective buyer has made an offer that is based on certain conditions, and the seller has accepted the deal. But that’s not the end of it.
There are variations in the meaning of “contingency”. You’ll only discover which variation applies to a specific property by asking the selling agent.
The contingency might mean the agent can continue to show the house to other buyers – but this is not always the case. There are occasions where the buyer and seller agree the sales process should stop.
There’s also a thing called a “kick-out” clause, which means that all the contingencies – think of them as conditions –have to be resolved before an agreed deadline.
Another variation is the “short sale” contingency. This is where the seller accepts an offer but it’s less than the mortgage on the property, and the lender must approve the deal. In this situation, the house is usually no longer on the market.
If you’re currently in the market, you should acquaint yourself with how to negotiate a contingent offer because it will give you a few options before you need to commit.
As a buyer, you might make their offer contingent on obtaining a mortgage, or the home passing various pest, roofing and building inspections.
You could even ask that your purchase is contingent on the sale of your existing home. The seller doesn’t have to accept this or any other request, but everything is negotiable.
If you’ve seen a home that declares its sale to be contingent but you’re interested in making an offer, you should ask your agent to approach the selling agent.
If the seller likes what they hear, they’re within their rights to ditch the “contingent sale” and, at the very least, approach the other buyer in a legitimate effort to maximize the value of their home.
Bottom line – a contingent sale does not necessarily take the property off the market. So if you see a property that you like that’s been labelled a contingent sale, it always pays to ask the question about whether it’s worthwhile making an offer.