There is a lot of lingo in a real estate transaction. One word you may have heard before is “contingent”. When you search for a home online, you may come across a home that is contingent, and think, “what does contingent mean?” Here’s some clarification.
What does contingent mean in real estate?
When a home is contingent, that simply means the Seller has accepted an offer and the house is in escrow. Although, the offer has contingencies in place, or a condition that must be met before the sale is finalized.
What’s a contingency?
Generally, when you purchase a home, there are certain contingencies that are put in place to protect the buyer from purchasing a home that isn’t exactly what they thought it was. For example, one of the contingencies is for inspection. Once you get a home inspection, you find out a lot about the property. The home could look perfect on the outside, but then an inspection is done and you find the house needs all new plumbing. This is your chance to make a decision if this is a house you’d like to move forward with, or move on from. Thanks to your inspection contingency!
What kind of contingencies are common?
Contingencies range from inspections, to appraisals, to disclosures, to loans. All contingencies by default are removed within 17 days of acceptance of an offer, except for the loan. The loan contingency by default has a 21 day contingency period. These contingency periods are standard to the California Residential Purchase agreement. You may shorten or lengthen these time frames in the contract if desired. There are many contingencies you can add, but another common one buyers might add is a Contingency of Sale. I’ve talked about this previously on my blog “What you need to know about selling before you buy”. On the seller side, you might have a Contingency of Purchase attached to your listing. This means, the sale will only go through when the seller is able to find a replacement property.
What you should know…
Contingencies are put in place to protect both the buyer and the seller. Keep in mind, once these contingencies are removed, you may not cancel escrow without loosing some or all of your earnest money. So be sure that you’re on top of doing your due diligence within the contingency periods so you don’t find yourself in a pickle. If you need extra time, DON’T WORRY, if your agent is skilled *cough, cough* they will likely be able to negotiate you an extension.
You can read all about the legalities of contingencies on the California Association of Realtors website!
Check out this list of open houses going on this weekend in Huntington Beach by clicking HERE! You can find me at 8731 Princess Circle, Huntington Beach SATURDAY 1-4pm!
⬇ Thinking of Selling this year? Get your free instant home valuation ⬇